July 2025 saw a sharp downturn in Canadian employment, with 40,800 positions lost, the steepest drop since early 2022 and, excluding the pandemic, the worst in seven years. This downturn pulled the employment rate down to 60.7%, its lowest level since November 2024.
Despite the sharp decline in jobs, the overall unemployment rate remained unchanged at 6.9%, a level that remains elevated by multi-year standards.
Young Canadians aged 15 to 24 were particularly affected. Their employment rate plunged to 53.6%, a threshold not seen since 1998 (excluding pandemic years). Meanwhile, their unemployment rate surged to 14.6%, the highest since September 2010 outside of 2020–2021.
Several sectors absorbed significant job losses:
Information, Culture & Recreation: down by 29,000
Construction: down by 22,000
Business Support Services: down by 19,000
On the upside, Transportation and Warehousing bucked the trend, adding roughly 26,000 jobs.
U.S. tariffs on steel, aluminum, and autos continue to weigh on the manufacturing sector, contributing to slower hiring trends, though layoffs have remained steady, holding at 1.1% year-over-year. Despite the slowdown, wages for permanent employees rose by 3.5% year-over-year to an average of C$37.66 per hour, a figure tracked closely by the Bank of Canada.
This labor market stumble follows an unexpected 83,000-job gain in June, pointing toward a volatile economic trajectory. Market odds of a potential Bank of Canada rate cut in September have risen, with investors pricing in a 38% chance following this report
