In July, the Canadian economy unexpectedly created 75,100 new jobs, and the unemployment rate fell to its lowest level in two years, indicating further economic recovery.
The unemployment rate fell to 6.4% in July from 6.5% the previous month, Statistics Canada reported on Friday. Economists surveyed by Bloomberg had expected employment to grow by only 20,000 jobs, with the unemployment rate remaining at 6.5%. The actual increase exceeded even the highest forecasts of analysts.
From May to July, employment increased by 181,100 people — the largest three-month growth since U.S. President Donald Trump began imposing tariffs on Canadian goods. The main increase was provided by full-time jobs, primarily in the private sector and among the self-employed. The number of hours worked also increased by 0.6%.
Economy gains momentum
Stronger-than-expected labor market indicators suggest that Canada’s economic recovery continued into the third quarter. Preliminary data from Statistics Canada showed that the economy grew by 3.4% year-over-year in April-June after a prolonged period of stagnation caused by U.S. tariffs. The latest data on international trade also indicate further strengthening of the economy.
Despite signs of stabilization, trade uncertainty remains. U.S. President Donald Trump has threatened to impose a new package of 50% tariffs on a number of Canadian goods starting August 19. The day before, Canadian officials met with U.S. Trade Representative Jamieson Greer, trying to reach agreements before the deadline set by Washington.
The wholesale and retail trade sectors created the most new jobs in July. Growth was also recorded in finance, insurance, real estate operations, leasing, professional, scientific and technical services, and construction. At the same time, the largest reduction in employment occurred in public administration. The number of public sector employees decreased year-over-year for the first time since 2016, excluding the pandemic period. The main reason was the reduction in employment in the education sector.
For students returning to school, the situation in the summer labor market turned out to be better than last year. The unemployment rate among youth aged 15 to 24 was 15.1%, which is 2.4 percentage points lower than in July 2025, although the figure is still above the pre-pandemic average. Among youth aged 20 to 24 returning to school, unemployment was 6.3% — the lowest level since July 2018. The average hourly wage of permanent full-time employees increased by 3% year-over-year compared to 3.7% the previous month.
Source: Bloomberg
