Canadian Employment (July 2025)

Canada's economy sheds jobs in July, unemployment rate steady as labour force shrinks

• Canada's economy lost 41k jobs on net in July (-0.2% month/month), weaker than consensus expectations. The details were similarly weak, with job losses concentrated in full-time positions (-51k) and in the private sector (-39K).
• The unemployment rate held steady at 6.9% in June, as the labour force shrunk (-33k). Despite the flat headline, the share of people who have been unemployed long term (>27 weeks) was the highest since 1998 at 23.8%. 
• Youth bore the brunt of a cooler labour market on the month (-34k, -1.2% m/m). Younger Canadians continue to face a tough job market, with the unemployment rate at 14.6%, the highest since 2010 (ex-pandemic). 
• Job losses were broad-based across goods and services sectors. The biggest losses were seen in information, culture and recreation (-29k, -3.3% m/m), construction (-22k, -1.3% m/m), business building and other support services (-19k, -2.8% m/m) and health care and social assistance (-17k, +0.6% m/m). Notable job gains were seen in transportation and warehousing (+26k, +2.4% m/m).
• Wage growth was steady in July. Average hourly wages rose 3.3% versus a year ago, up slightly from 3.2% in June.                

Key Implications

• Canada's labour market gave back half of June's outsized job gains in July. Employment tallies have always been volatile in the Labour Force Survey, with the unemployment rate being the key metric to watch. The unemployment rate did hold steady, but given it was due to declining labour force participation, is not a very positive sign. We expect the stagnation in labour force growth to continue, which will keep the unemployment rate from rising too high, despite weak labour demand.  
• The Bank of Canada has a fair bit of time before its next rate setting date on September 17th. Today's jobs report likely won't move the needle much on the Bank's thinking on the economy relative to its recent monetary policy report. We think a strong argument for further rate cuts remains in Canada, we'll see if the BoC agrees.

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