Canada saw a rise in employment by 75,000 jobs in July, marking a 0.4 percent increase, leading to a decrease in the unemployment rate to 6.4 percent, the lowest in two years. Statistics Canada’s latest labor force survey revealed that the majority of these job gains were distributed between full-time and part-time positions, with the wholesale and retail trade sector alone contributing 21,000 new jobs.

The report highlighted that employment levels increased for individuals aged 25 to 54, predominantly among women in that age bracket. While the unemployment rate remained steady at 5.8 percent for men aged 25 to 54, it dropped to 5.2 percent for women in the same group. Ontario recorded the highest job growth among provinces in July, adding 52,000 jobs (0.6 percent increase), primarily in the professional, scientific, and technical services sector. Similarly, British Columbia experienced a notable increase with 18,000 new job additions.

Manitoba witnessed a 0.8 percent rise in its employment rate, creating 5,900 new jobs, while Nova Scotia also saw a similar 0.8 percent increase, adding 4,600 jobs. Statistics Canada reported an overall increase of 181,000 jobs since April and 196,000 compared to the previous year. The positive momentum in July follows encouraging job reports from May and June.

Economists expressed optimism regarding the job market, with CIBC senior economist Andrew Grantham noting that the job numbers surpassed expectations due to robust hiring in July. The summer job market for students was highlighted as particularly strong, with youth employment rates at their lowest since early 2024. However, there were disparities in unemployment rates among racialized youth, with higher rates observed for Black, Chinese, and South Asian youth compared to non-racialized and non-Indigenous youth.

While the current 6.4 percent unemployment rate is the lowest in two years, economists caution that it remains slightly higher than full employment levels. BMO chief economist Douglas Porter emphasized that although positive trends in employment are evident, average hourly wage increases have slowed to 2.8 percent year over year, the slowest in four years.

Looking ahead, economists anticipate potential challenges in the labor market due to looming tariffs, with U.S. President Donald Trump threatening 50 percent tariffs on various Canadian imports. Discussions on trade agreements, including the Canada-United States-Mexico Agreement, are set to resume in the fall, amidst efforts to address trade-related uncertainties and potential economic impacts.