Job Losses Concentrated Among Youth
Canada’s labour market shed a net 40,800 jobs in July, with the unemployment rate holding steady at 6.9%, according to Statistics Canada. The decline was driven primarily by losses in full-time positions and disproportionately affected workers aged 15 to 24. Youth employment fell 0.7 percentage points to 53.6%, the lowest since late 1998 outside the pandemic years, while the youth unemployment rate climbed to 14.6%, its highest since 2010.
Unemployment among young men rose to 16.2% and among young women to 12.8%, continuing a two-year upward trend. Statistics Canada noted that while overall job numbers have barely changed since January, young workers face particularly challenging conditions.
Economists See Rate Cut Potential
Markets had expected a gain of 15,000 jobs and a slight rise in unemployment to 7%, according to CIBC Economics. Instead, CIBC economist Andrew Grantham said the weaker-than-expected figures “support our call of a 25-basis-point interest rate reduction” at the Bank of Canada’s September 17 meeting. However, he noted that upcoming inflation and August labour data could alter that outlook.
BMO chief economist Douglas Porter called the July report “unambiguously weak” but pointed to the volatility of monthly data. Looking at June and July together, employment averaged a gain of 21,000 jobs per month, with the unemployment rate unchanged at 6.9%. Porter said this serves as a “counterweight” to June’s unexpected 83,000-job surge, though further inflation easing would be needed to strengthen the case for a September cut.
Regional and Sector Trends
The participation rate slipped by 0.2 percentage points to 65.2% in July, indicating fewer people working or actively seeking work. Alberta lost 17,000 jobs and British Columbia shed 16,000, while Saskatchewan gained 3,500. Other provinces saw little change. Sector data showed stability in manufacturing but declines in information, culture, recreation, and construction.
Indeed Canada senior economist Brendon Bernard said the report’s details point to longer-term structural trends rather than a sharp tariff-related shock. Weak hiring, not layoffs, was identified as the main drag, with job seekers on the margins of the market struggling to find positions. Still, 96% of employed Canadians reported confidence in their job outlook.
Outlook Remains Cautious
While core-aged workers saw steady employment, the persistence of high youth unemployment is a concern for policymakers. Economists expect the Bank of Canada to weigh this softening in the labour market against inflation trends when determining its next policy move. For now, the data suggest an economy with modest excess capacity, facing both regional disparities and demographic challenges in employment growth.