Last month, Canads’s unemployment rate dropped for the first time January.Christinne Muschi/The Canadian Press
Canada’s jobless rate unexpectedly decreased to 6.9 per cent in June – the first drop in unemployment since January, driven mostly by growth in part-time work.
Statistics Canada’s Labour Force Survey for June showed that the economy added more than 83,000 jobs that month, with 70,000 of those positions concentrated in part-time work. The unemployment rate ticked down from 7 per cent in May — it had been rising since January, and has not gone below 6.5 per cent since August, 2024.
The results came as a surprise to economists, who were expecting no change in employment and the jobless rate ticking up to 7.1 per cent.
Employment increases came mainly from the wholesale and retail trade sectors, which added 34,000 jobs, as well as health care and social assistance which generated 17,000 jobs in June.
The manufacturing sector managed to add 10,000 jobs in June, though it has shed more than 26,000 jobs on a year-over-year basis.
Trade-dependent sectors such as manufacturing and transportation have been hard hit by layoffs over the past six months due to the tariff war between Canada and the United States. On Thursday evening, U.S. President Donald Trump threatened to impose a 35 per-cent tariff on Canadian imports into the U.S. Last month, Mr. Trump doubled tariffs on steel and aluminum to 50 per cent, and this week said he will slap a 50-per-cent tariff on copper imports on Aug. 1.
Over all, there were 1.6 million unemployment people in June, Statscan data showed, up 9 per cent on a year-over-year basis. The youth unemployment rate remained unchanged at 14.2 per cent.
Despite the trade volatility, investors see slim odds of the Bank of Canada lowering interest rates on July 30. Money markets are indicating that there’s just a 19-per-cent chance of a cut later this month, according to LSEG data, down from 26 per cent before the jobs report was released.
Royce Mendes, managing director and head of macro strategy at Desjardins Capital Markets, called the job numbers “solid” and increased his forecast for GDP growth in the second quarter of 2025.
“With the unemployment rate still elevated, today’s labour market data won’t be the swing factor for the upcoming Bank of Canada rate decision,” he noted, adding that next week’s inflation data will play a much more important role in determining if the bank will reduce rates.