In July 2025, Canada’s labour market took a sharp downturn, shedding 40,800 jobs and pushing the employment rate to 60.7%, the lowest level in eight months. According to Statistics Canada, the decline was concentrated in the manufacturing sector, which lost nearly 10,000 jobs compared to the same month last year, largely due to U.S. tariffs on steel, aluminum, and automobiles.

Despite the job losses, the unemployment rate held steady at 6.9%, as fewer people actively sought work. However, the impact was not evenly felt. Youth employment saw a steep drop, with the jobless rate among Canadians aged 15–24 climbing to 14.6%. Their employment rate fell to 53.6%, marking one of the lowest readings since the 1990s outside of pandemic years.

The construction sector also recorded job cuts, while gains in health care and public administration partially offset the losses. The regional picture was mixed—Ontario and British Columbia experienced notable employment declines, while Quebec posted modest gains.

Despite weaker hiring, wage growth persisted. Average hourly wages rose by 3.5% year-over-year to C$37.66, suggesting that employers may be paying more to retain skilled workers amid ongoing labour shortages in some industries.

Economists warn that the combination of tariffs, slowing consumer demand, and cautious business investment could push the unemployment rate above 7% in the coming months. With the Bank of Canada already navigating a delicate balance between inflation control and economic growth, policymakers face pressure to stimulate hiring without reigniting price pressures.

The latest figures underscore the challenges Canada faces in sustaining job growth while contending with trade disputes and shifting global economic conditions.