Canada saw a rise of 75,000 jobs in July, marking a 0.4 percent increase, leading to a drop in the unemployment rate to 6.4 percent, the lowest in two years. Statistics Canada’s latest labor force survey revealed that the majority of these job gains were evenly distributed between full-time and part-time positions, notably with the wholesale and retail trade sector adding 21,000 new jobs.
Employment levels rose for individuals aged 25 to 54, particularly among women in that age category. While the unemployment rate remained steady at 5.8 percent for men aged 25 to 54, it decreased to 5.2 percent for women in the same demographic. Ontario witnessed the largest job growth among all provinces in July, adding 52,000 jobs, mainly in the professional, scientific, and technical services sector. British Columbia also experienced a substantial increase, adding 18,000 new jobs.
Manitoba’s employment rate surged by 0.8 percent, resulting in 5,900 new jobs, while Nova Scotia saw a similar 0.8 percent increase, adding 4,600 jobs. Since April, Canada has created 181,000 new jobs, with a total of 196,000 jobs added compared to the previous year. This positive momentum in July follows strong job reports in May and June.
CIBC senior economist Andrew Grantham noted that the job numbers exceeded expectations, attributing the robust hiring in July for the significant increase. Additionally, the summer job market for students showed strength not seen in the past two years, with the unemployment rate for young people aged 15 to 24 dropping to its lowest since early 2024. However, disparities existed within racialized youth groups, with higher unemployment rates for Black, Chinese, and South Asian youth compared to non-racialized and non-Indigenous youth.
Despite the overall unemployment rate hitting a two-year low of 6.4 percent, economists like Grantham highlighted that it remains half a point higher than full employment levels. This indicates that there is still room for improvement in the labor market to drive inflation. BMO chief economist Douglas Porter emphasized that while employment trends are positive, the slowdown in average hourly wage growth to 2.8 percent year-over-year, the slowest in four years, could impact the overall economic recovery.
Looking ahead, the labor market is showing signs of stabilization following a challenging first quarter, with businesses adapting to trade-related uncertainties. However, looming tariffs, including U.S. President Donald Trump’s threats of imposing 50 percent tariffs on Canadian imports, could potentially impact these recent gains. Canada is actively engaged in negotiations to address these trade challenges and is seeking relief from sectoral tariffs to maintain economic stability.
The latest jobs data indicates a positive trend in Canada’s labor market, with businesses adapting to ongoing trade uncertainties. Talks on trade agreements are set to resume in the fall, highlighting the importance of continued efforts to navigate potential trade disruptions.