Canada experienced a job increase of 75,000 in July, representing a 0.4% rise, as the unemployment rate dropped to 6.4%, marking its lowest point in two years. Statistics Canada’s recent labor force survey highlighted that the majority of these job gains were distributed between full-time and part-time positions, with the wholesale and retail trade sector alone contributing 21,000 new jobs.
Employment growth was notable among individuals aged 25 to 54, particularly for women in this age group. While the unemployment rate remained steady at 5.8% for men aged 25 to 54, it decreased to 5.2% for women in the same category. Ontario led the provinces in job creation, adding 52,000 jobs in July, primarily in the professional, scientific, and technical services industry. British Columbia also saw a significant increase, with 18,000 new jobs.
Manitoba and Nova Scotia experienced a rise in employment rates by 0.8%, adding 5,900 and 4,600 new jobs, respectively. Since April, Canada has gained 181,000 new jobs, with a total of 196,000 more jobs compared to the previous year. The positive job market trend in July follows a series of favorable employment reports in May and June.
The surge in job numbers exceeded expectations, with CIBC senior economist Andrew Grantham attributing it to robust hiring activities during the month. The summer job market for students was particularly strong, reaching its highest level in the past two years, and the unemployment rate for individuals aged 15 to 24 was the lowest since early 2024.
However, the unemployment situation varied among racialized youth, with the July unemployment rates standing at 22.6% for Black youth, 15.4% for Chinese youth, and 13.9% for South Asian youth, in contrast to 11.6% for non-racialized and non-Indigenous youth. Despite the overall unemployment rate dropping to 6.4%, Grantham noted that it remains half a point higher than what is considered full employment in Canada, indicating that it may not fuel inflation.
BMO chief economist Douglas Porter highlighted the modest growth in Canada’s labor force over the past year and the slowdown in average hourly wage increases to 2.8% year over year, the slowest rate in four years. The positive employment trends were tempered by this wage growth deceleration, aligning with pre-pandemic patterns.
Economists suggested that the labor market appeared to be stabilizing after a mild contraction in the first quarter, with businesses navigating trade uncertainties. While Canada’s economy showed improvement in the second quarter, potential trade disruptions loom on the horizon, including U.S. President Donald Trump’s proposed 50% tariffs on Canadian imports. Talks on trade agreements and tariff negotiations are set to continue in the fall, impacting Canada’s economic outlook.