Farm workers harvest crops near Cypress River, Manitoba. (Photo by: Dave Reede /Design Pics Editorial/Universal Images Group via Getty Images) · Design Pics Editorial via Getty Images
Canada’s labour market lost a net 40,800 jobs in July and the unemployment rate held steady at 6.9 per cent, according to Statistics Canada data released on Friday. The jobs lost were largely full-time positions, the agency says, and net job losses were highest among people aged 15–24.
“Overall, there has been little net employment growth since the beginning of the year, and the number of employed people in July was little changed compared with January (+27,000; +0.1 per cent),” Statistics Canada’s report on the data states.
Financial experts had expected to see 15,000 jobs added, according to consensus estimates published by CIBC Economics, and the unemployment rate to rise 0.1 percentage points to seven per cent.
In a note to investors, CIBC economist Andrew Grantham writes that “the Canadian labour market came back down to earth with a bump” and says today’s weak data “is supportive for our call of a 25-basis-point interest rate reduction” at the Bank of Canada’s next announcement on September 17.
But with that meeting more than a month away, Grantham notes, there remain several more data releases, including inflation data and the August jobs report, that could change the outlook.
BMO chief economist Douglas Porter described the July data as “unambiguously weak,” but argued that the volatility of employment numbers justifies looking at the two-month average. That shows a monthly job gain of 21,000, with the unemployment rate at 6.9 per cent.
For the Bank of Canada, this acts as a heavy counterweight to the outsized strength in June.Douglas Porter, BMO chief economist
For June, Statistics Canada reported that the economy added 83,000 jobs, well above expectations, with the unemployment rate falling from seven per cent to 6.9 per cent.
With labour data for both June and July considered, “the overall picture is a soft economy, running with some excess capacity, not surprising in light of the trade uncertainty,” Porter writes. “For the Bank of Canada, this acts as a heavy counterweight to the outsized strength in June, but it will still need to see inflation slow notably over the next two prints for a September cut to be a high likelihood.”
July’s unemployment rate held steady because the number of people looking for work or on temporary layoff was similar to June, Statistics Canada says — but the participation rate, which measures the proportion of people aged 15 and older with a job or actively seeking one, fell by 0.2 percentage points to 65.2 per cent.
Story Continues
In a statement sent to Yahoo Finance Canada, Indeed Canada senior economist Brendon Bernard notes that many of the report’s details seem less reflective of tariff shock than of longer-term trends.
“Manufacturing jobs were roughly unchanged, [with] the weakness coming from information, culture, and recreation, which had been fairing well recently, as well as construction,” Bernard says. “Losses were also concentrated in Alberta and BC, while manufacturing-exposed Ontario and Quebec held steadier.”
Alberta lost 17,000 net jobs (-0.6 per cent) in July, while B.C. lost 16,000 (-0.5 per cent). Saskatchewan added 3,500 jobs (up 0.6 per cent). Job numbers in the other provinces were essentially unchanged from June.
The July data show that weak hiring, not layoffs, “remains the primary drag on the employment situation,” Bernard writes, with “job seekers on the margins of the labour market” in a difficult situation.
Survey data in the July report also show those with jobs are overwhelmingly comfortable with their job outlook, with 96 per cent of employees saying they were very confident, quite confident or somewhat confident about “employment prospects in their current line of work.”
Employment was steady from the previous month for “core-aged” men and women (between 25 and 54 years old), Statistics Canada says, but multiple indicators show that “youth continue to face challenging labour market conditions.” Youth employment fell 0.7 percentage points to 53.6 per cent, the lowest rate since November 1998 (excluding 2020 and 2021, when the pandemic had a pronounced impact on job numbers).
The youth unemployment rate rose from 14.2 per cent in June to 14.6 per cent in July, hitting the highest rate since September 2010 (again excluding the pandemic era). Statistics Canada says the youth unemployment rate has trended higher for two years; in July it was was up 4.3 percentage points compared with July 2023. Unemployment rates rose for both young men (+5.7 percentage points to 16.2 per cent) and young women (+2.6 percentage points to 12.8 per cent).
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
Download the Yahoo Finance app, available for Apple and Android.