Statistics Canada released the labour market data on Friday. Canada's unemployment rate rose to 7.0% in August from 6.8% in July. Analysts had expected the unemployment rate to remain unchanged at 6.8%.

The increase was driven by higher labour participation. The labour participation rate increased to 65.9% in August from 65.7% in July.

The number of employed people climbed by 12,000 jobs in August, beating expectations for a decline of 4,500 jobs, after a 6,600 increase in July.

The increase was driven by a rise in full-time work. Full-time employment was up by 54,000 in August, while part-time employment fell by 42,000 jobs.

The Bank of Canada monitors closely the labour participation rate.