Canada saw a significant increase of 75,000 jobs in July, marking a 0.4% rise and leading to a drop in the unemployment rate to 6.4%, its lowest level 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, with the wholesale and retail trade sector contributing 21,000 new jobs.
Employment notably grew for individuals aged 25 to 54, especially for women in this age group. While the jobless rate remained steady at 5.8% for men aged 25 to 54, it decreased to 5.2% for women in the same category. Ontario recorded the highest job growth among all provinces, adding 52,000 jobs, mainly in the professional, scientific, and technical services sector. British Columbia also experienced a notable increase with 18,000 new jobs.
Manitoba and Nova Scotia both saw employment rate hikes of 0.8%, resulting in the addition of 5,900 and 4,600 jobs, respectively. Since April, the country has gained 181,000 jobs, with a year-over-year increase of 196,000 jobs. This positive trend in July follows the good employment news from May and June.
The surge in job numbers surpassed expectations, with CIBC senior economist Andrew Grantham attributing it to robust hiring levels in July. The youth job market, particularly for those aged 15 to 24, experienced a significant improvement, with the lowest unemployment rate since early 2024. However, there were disparities among racialized youth, with higher unemployment rates for Black, Chinese, and South Asian youth compared to non-racialized and non-Indigenous youth.
While the overall unemployment rate of 6.4% is at a two-year low, economists caution that it remains slightly higher than full employment levels. BMO chief economist Douglas Porter highlighted that the labor force has grown modestly over the past year, leading to a gradual decline in the unemployment rate. Despite positive employment trends, the average hourly wage growth has slowed to 2.8% year over year, the slowest rate in four years.
Looking ahead, economists are concerned about potential impacts from looming tariffs, with President Donald Trump threatening a 50% tariff on various Canadian imports. Canada is seeking to resolve trade disputes, including provincial bans on U.S. alcohol sales and sectoral tariffs on products like steel and aluminum. Talks on the Canada-United States-Mexico Agreement are set to resume in the coming months.