Canada’s job engine downshift: what July’s labour force survey really says
Labour force survey - July 2025
Write to: Minh Dang mdang@staffingjournal.ca
Canada lost momentum in July. The economy shed 41,000 jobs and the employment rate slipped to 60.7%, its lowest in eight months, even as the unemployment rate held at 6.9%. The pullback erased roughly half of June’s unexpected surge and underscores a labour market that’s cooling, not collapsing, but increasingly uneven beneath the surface.
The headline vs. the undercurrent
Full-time roles took the hit (-51,000), while part-time was little changed, one reason the jobless rate didn’t rise despite fewer people working. A dip in labour-force participation (to 65.2%) helped keep unemployment steady. Total hours worked were essentially flat on the month (-0.2%) and up just 0.3% year-over-year, a picture of slower output and hiring appetite.
Wage growth ticked slightly higher: average hourly wages +3.3% y/y to $36.16 in July (not seasonally adjusted), from +3.2% in June, solid, but no longer sprinting.
Who’s feeling it most
Youth bore the brunt. Employment among those 15–24 fell by 34,000, and their unemployment rate climbed to 14.6%, the highest since 2010 outside the pandemic. Returning students faced a 17.5% jobless rate, the toughest July since 2009. Long-term unemployment also worsened: 24% of the unemployed have been searching 27+ weeks, the highest share (excluding 2020–21) since 1998.
Private sector was soft. Private payrolls dropped 39,000, while the public sector and self-employment were little changed, another sign firms are pausing hiring plans rather than mass-laying off.
Where the jobs moved
Industry losers: Information, culture & recreation (-29,000), construction (-22,000), business, building & support services (-19,000), and health care & social assistance (-17,000) (which partly unwinds June’s gain). Transportation & warehousing was a bright spot (+26,000).
Regional picture: Alberta (-17,000; jobless 7.8%) and B.C. (-16,000; jobless 5.9%) led declines; Saskatchewan was the only gainer (+3,500; jobless 5.0%). Ontario employment was flat, but its jobless rate remains elevated at 7.9%; Quebec’s jobless rate fell to 5.5% as fewer people searched for work. In the Toronto CMA, unemployment reached 9.0% (3-month average).
Why it matters for the economy, and the Bank of Canada
Markets and bank economists read July as a cooling, not a crash. The step-down follows June’s outsized gain and aligns with a year of softer hiring, weaker job postings, and trade-related uncertainty clouding export-exposed sectors. Several desks note the print keeps a BoC cut in play, contingent on inflation cooperating, while reinforcing a near-term growth path that’s sub-trend.
What employers and job seekers should watch next
Hiring pipelines: The fall in full-time roles and private payrolls suggests more hiring freezes and slower backfills rather than broad layoffs. Expect longer time-to-hire and more contract-first strategies in project, IT, and back-office roles as firms protect margins.
Sector split:
Still resilient: Transportation & warehousing (logistics rerouting), selective public services, and pockets of health care (despite July’s dip, +54,000 y/y).
Under pressure: Construction (rate-sensitive), information/culture (ad budgets, content cycles and AI disruption), and business support services (discretionary outsourcing). Tariff noise adds drag to manufacturing sentiment, even where payrolls were more stable in July.
Youth labour market: With student unemployment at multi-year highs, expect elevated competition for entry-level roles, more bridge contracts/internships, and a premium on job-ready credentials (certifications, co-op experience).
The bottom line
July’s LFS confirms a slow-bleed cooldown: fewer full-time jobs, stickier unemployment, softer participation, and only modest wage heat. The economy is bending, not breaking, yet for young workers and trade-exposed industries, the strain is real. If inflation behaves, the report nudges the BoC toward more dovish territory into the fall, but the labour market’s message for now is simple: caution is the corporate playbook.