Summer Sun Keeps Rising Over Canada’s Labour Market as July Hiring Surges

While threats to reintroduce further uncertainty loom, the impacts have yet to show up in this sunny summer data.

Canada’s labour market boosted in July, with employment up 75,000 and three-month gains across May, June and July running about 130,000 above the same stretch in 2025. The unemployment rate fell to a two-year low of 6.4%, while the employment rate rose to 60.9% and participation edged up to 65.1%. Hiring was led by wholesale and retail trade, finance and real estate, professional services, and construction, with private-sector workers and core-aged women helping sustain the summer momentum.

The question now is whether that resilience can last. If uncertainty around new tariffs persists, we may not see the full impact on hiring and employment until later this year

Key Takeaways

• Employment Levels: Employment delivered a stronger-than-expected lift in July, rising by 75,000 (+0.4%), with gains split between full-time and part-time work. This pushed the employment rate up 0.1 percentage points to 60.9%, leaving it 0.2 points higher than a year earlier. The July gain also extended the recent summer rebound, with total employment up 181,000 since April, driven mainly by a 193,000 increase in full-time work. Overall, the data suggest the labour market has moved from stabilization toward firmer hiring momentum.
• Unemployment and Participation Rates: The unemployment rate declined for a third consecutive month, falling 0.1 percentage points to 6.4%, its lowest level since July 2024. The rate is now down 0.5 percentage points since April and 0.5 points year-over-year, pointing to a meaningful easing in labour market slack. The participation rate edged up to 65.1%, suggesting the decline in unemployment came alongside a modestly larger labour force rather than weaker job search activity.
• Demographics and Job Types: July’s employment gains were concentrated among core-aged workers, with those aged 25 to 54 adding 51,000 jobs, led by core-aged women (+33,000). The unemployment rate for core-aged women fell 0.3 percentage points to 5.2%, while rates for core-aged men, youth and workers aged 55 and older were little changed. Youth unemployment held at 12.6%, down from April’s recent peak but still above pre-pandemic levels. By job type, gains were split between full-time (+38,600) and part-time (+36,600) employment.
• Sectoral Breakdown:Industry performance was broadly constructive in July, 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). The gains point to a more diversified hiring base than in earlier months. Still, the strength was not universal: employment declined in public administration (-15,000) and agriculture (-9,600). Services-producing industries did most of the heavy lifting, adding 64,400 jobs, compared with 10,800 in goods-producing industries.
• Provincial Trends: Provincial gains were concentrated in a handful of markets, with Ontario (+52,000) accounting for the largest share of July’s employment increase. Ontario has now posted a net gain of 119,000 jobs over four months, while its unemployment rate fell to 6.8%, the lowest since July 2024. Employment also rose in British Columbia (+18,000), Manitoba (+5,900) and Nova Scotia (+4,600). Elsewhere, conditions were more muted, with Quebec little changed and Alberta holding steady despite strong year-over-year employment growth.

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