1-866-711-2262

Search

Labour Market Momentum Continues to Build

Canadian Economics

By: Loubna Zebiri

    

Employment continued to expand in July, with the economy adding 75,100 positions. The employment rate edged up to 60.9 per cent, while the unemployment rate declined further to 6.4 per cent, its lowest level in two years. Meanwhile, wage growth moderated from June, with average hourly earnings rising by 2.8 per cent year-over-year.

  • July’s employment gains were broadly split between full-time and part-time work, which increased by 39,000 and 37,000 positions, respectively.
  • Over the past seven months, employment growth continued to be driven primarily by full-time positions, which increased by approximately 82,000 jobs, while part-time employment edged down by 13,100 positions.
  • Compared with the same period last year, employment increased by roughly 196,000 jobs, with full-time employment accounting for all these gains, rising by approximately 206,000 jobs.
  • On a monthly basis, employment growth was led by wholesale and retail trade (+21,000), followed by finance, insurance, real estate, rental and leasing (+18,000), professional, scientific and technical services (+17,000), and construction (+16,000).
  • Meanwhile, losses were recorded in public administration (-15,000) and agriculture (-9,600).
  • On a year-over-year basis, employment remained broadly stable across most sectors, with health care and social assistance standing out as the main source of gains, increasing by 126,400 positions over the period.
  • Provincially, employment increased across most regions in July, with Ontario recording the largest monthly gain, adding 51,600 positions. Ontario also posted a cumulative gain of 51,100 jobs between January and July.
  • In contrast, Alberta recorded its first notable employment decline of the year, shedding roughly 7,100 positions in July.
  • Compared with July of last year, Ontario recorded the largest employment gain, with employment increasing by 108,300 positions, followed by Alberta, where employment rose by approximately 91,000.

Key insights

The labour market has been resilient over the past few months. Employment in Canada has now increased for three consecutive months and is up by 181,000 positions since April. As a result, employment has now surpassed its year-end 2025 level for the first time this year. This morning’s release is in line with our most recent Index of Business Confidence, which pointed to improving investment and hiring intentions among businesses and signals a potential turning point in sentiment.

Labour-market conditions continued to improve among core-aged workers, particularly women. The unemployment rate for core-aged women fell to 5.2 per cent in July, while their employment rate reached 81.2 per cent, well above its pre-pandemic average. By contrast, conditions for core-aged men and more senior workers were broadly unchanged.

Youth labour-market conditions also improved but remain comparatively weak. The youth unemployment rate, which has been a key concern in Canada’s labour market for the past few years, fell to 12.6 per cent in July, down from its April peak and 1.9 percentage points from a year earlier. Despite the positive momentum, the youth unemployment rate remains well above its pre-pandemic average of 10.8 per cent, suggesting that younger workers continue to face greater challenges entering the labour market, despite the broader decline in unemployment.

Despite today’s encouraging labour market report, volatility is likely to remain a defining feature of the outlook through the end of 2026. Renewed U.S. tariff threats and ongoing uncertainty surrounding the conflict in the Middle East are expected to weigh on both consumer and business confidence in the months ahead. Progress on either front could provide a boost to hiring, while any deterioration could have the opposite effect. As a result, hiring activity is likely to remain volatile over the remainder of the year as businesses respond to changing economic and geopolitical conditions.

Related Insights

See More Insights