Canada saw a rise of 75,000 jobs in July, marking a 0.4% increase and pushing the unemployment rate down to 6.4%, its lowest level in two years. According to Statistics Canada’s latest labor force survey, the majority of these job gains were evenly distributed between full-time and part-time employment, with the wholesale and retail trade sector contributing 21,000 new jobs.
Employment saw an uptick among individuals aged 25 to 54, particularly women in that age bracket. While the unemployment rate remained stable at 5.8% for men aged 25 to 54, it dropped to 5.2% for women in the same group. Ontario led the provinces in job creation, adding 52,000 jobs (a 0.6% increase), mainly in the professional, scientific, and technical services industry. British Columbia also experienced a similar surge, adding 18,000 new jobs.
Manitoba’s employment rate climbed by 0.8%, adding 5,900 jobs, while Nova Scotia recorded a similar increase at 0.8%, attributing to 4,600 new job opportunities. Since April, Canada has added 181,000 jobs and 196,000 jobs compared to the previous year. The positive trend in July follows the promising job market news in May and June.
Economists were pleasantly surprised by the job report, with CIBC senior economist Andrew Grantham noting that the job numbers exceeded expectations, thanks to robust hiring in July. The summer job market for students was stronger than in the past two years, with the unemployment rate for young individuals (ages 15 to 24) hitting its lowest point since early 2024.
However, disparities persisted among racialized youth, with Black youth experiencing an unemployment rate of 22.6%, Chinese youth at 15.4%, and South Asian youth at 13.9%, compared to 11.6% for non-racialized and non-Indigenous youth. Despite the overall unemployment rate dropping to 6.4%, Grantham pointed out that it is still half a point higher than what would be considered full employment.
BMO chief economist Douglas Porter highlighted that Canada’s workforce has grown by less than 8,000 jobs per month or 91,200 individuals over the past year. Although the employment and job finding trends are positive, the average hourly wage increase has slowed down to 2.8% year over year, the lowest in four years and reflecting pre-pandemic patterns.
Looking ahead, looming tariffs could impact the job market gains, despite signs of stabilization after a mild contraction in the first quarter of the year. The economy is anticipated to have performed better in the second quarter, with real GDP estimated to have grown by 3.4% on an annualized basis. Desjardins managing director Royce Mendes noted that the recent job numbers indicate businesses are adapting to trade-related uncertainties.
However, potential trade disruptions loom on the horizon, with U.S. President Donald Trump threatening 50% tariffs on a range of Canadian imports starting on Aug. 19. Canada is advocating for the removal of these tariffs and seeking relief from sectoral tariffs on industries like steel and aluminum. Discussions on the Canada-United States-Mexico Agreement are set to resume in the coming months.