OTTAWA — Canada’s labour market took a significant step back in July, losing 40,800 jobs and pushing the employment rate down to 60.7%, its lowest point in eight months, according to the latest Statistics Canada data. The setback follows an unexpectedly strong June, when 83,000 jobs were added, and underscores a volatile employment landscape as the economy navigates trade uncertainty and high interest rates.
The unemployment rate held at 6.9%, still near a multi-year high, defying analysts’ forecasts for a slight increase to 7.0%. Economists had anticipated modest job growth of 13,500 for the month, making July’s performance a notable disappointment.
Youth Employment Hits Decades-Long Low
The sharpest blow landed on young Canadians aged 15 to 24. Their employment rate slid to 53.6%, the lowest since November 1998 outside pandemic years, while the youth unemployment rate surged to 14.6%, the highest since 2010. Students preparing to return to school in the fall are facing especially steep challenges in securing summer work.
Sector-by-Sector Shifts
Losses were unevenly distributed across industries.
- The information, culture and recreation sector shed 29,000 jobs.
- Construction recorded a drop of 22,000 positions.
- Business, building and support services contracted by 19,000 jobs.
Some industries, however, bucked the trend. Transportation and warehousing added 26,000 jobs, reflecting ongoing demand in logistics and distribution.
On a year-over-year basis, the retail trade sector saw the strongest growth at +6.4%, followed by finance, insurance, real estate, rental and leasing at +5.0%, and educational services at +4.9%. At the other end of the spectrum, agriculture employment plunged 10.8%, and forestry, fishing, mining, quarrying, oil and gas dropped 7.8%.
Economic Implications
BMO chief economist Douglas Porter described the figures as “an unambiguously weak report” following “an unambiguously strong report” in June. He suggested the combined picture points to a soft economy operating with excess capacity, a situation compounded by trade headwinds and slowing consumer demand.
With youth employment deeply depressed and certain resource-dependent industries under strain, policymakers face growing pressure to balance inflation control with measures to prevent further erosion in labour market health.
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Written for the Canadian Chamber of Commerce in Hungary News Section as part of our ongoing coverage of developments affecting Canadian trade, economy and international partnerships, August 2025