Canada’s labour market showed signs of continued improvement in July, with the economy adding 75,000 jobs and the unemployment rate falling to 6.4%, its lowest level in two years.
According to Statistics Canada’s latest Labour Force Survey, employment gains were broadly distributed between full-time and part-time positions. The wholesale and retail trade sector led job creation, adding 21,000 positions during the month.
Employment Gains Concentrated Among Prime-Age Workers
Statistics Canada reported that employment increased among Canadians aged 25 to 54, with most of the gains coming from women in that age group.
The unemployment rate for men aged 25 to 54 remained unchanged at 5.8%, while the rate for women in the same age group declined to 5.2%.
Canada has added 181,000 jobs since April and 196,000 compared with a year earlier, according to Statistics Canada.
Ontario Leads Provincial Job Growth
Ontario recorded the largest employment increase among Canadian provinces in July, adding 52,000 jobs, or 0.6%, driven largely by gains in professional, scientific and technical services.
British Columbia also posted strong growth, adding 18,000 jobs during the month.
Other provinces seeing employment gains included:
- Manitoba: employment increased 0.8%, with 5,900 new jobs.
- Nova Scotia: employment increased 0.8%, supported by 4,600 new jobs.
Economists See Signs of Labour Market Stabilization
The July employment increase exceeded expectations, with CIBC senior economist Andrew Grantham describing the result as “well above” forecasts due to strong hiring activity.
Grantham also highlighted improvements in the summer student employment market, noting that unemployment among young Canadians aged 15 to 24 reached its lowest level since early 2024.
However, employment conditions remain uneven across demographic groups. In July, unemployment among Black youth stood at 22.6%, compared with 15.4% for Chinese youth and 13.9% for South Asian youth. The unemployment rate for non-racialized and non-Indigenous youth was 11.6%.
Although the overall unemployment rate has improved, Grantham noted that it remains around half a percentage point above the level typically associated with full employment. He said this suggests labour market conditions are not currently strong enough to create significant domestically driven inflation pressures.
Wage Growth Slows Despite Employment Recovery
BMO chief economist Douglas Porter said Canada’s labour force has expanded by fewer than 8,000 jobs per month over the past year, meaning relatively modest employment gains can have a noticeable impact on the unemployment rate.
Porter also pointed to slower wage growth as a factor balancing the positive employment trends. Average hourly wages increased 2.8% year over year, down from 3.3% in June, marking the slowest pace in four years and returning closer to pre-pandemic trends.
