Weakest jobs report in three years dampens start to third quarter
Economists had expected a slight job gain ahead of Friday’s release.
Doug Porter, chief economist at BMO, said in a note to clients that July’s jobs report marked the weakest in three years, according to the bank’s report card. He noted that total hours worked fell 0.2% in July, marking a poor start to the third quarter for Canada’s economy. “This is an unambiguously weak report … although it comes hard on the heels of an unambiguously strong report,” Porter said.
TD Bank senior economist Leslie Preston said in a note that the employment figures are often volatile in the labour force survey, but the unemployment rate is the key metric to watch. “The unemployment rate did hold steady, but given it was due to declining labour force participation, is not a very positive sign,” she said. “We expect the stagnation in labour force growth to continue, which will keep the unemployment rate from rising too high, despite weak labour demand.”
Young workers in particular continue to struggle in a tough summer jobs market. Youth aged 15 to 24 lost 34,000 positions last month while the employment rate for the age group fell to 53.6%—the lowest level since November 1998, outside the COVID-19 pandemic. StatCan said employment was down across several industries in July. The information, culture, and recreation sector led job losses with 29,000 positions shed, followed by construction, which lost 22,000 roles.
Trade-sensitive industries show signs of life amid U.S. tariff pressures
Offsetting those losses was an increase of 26,000 jobs in transportation and warehousing, marking the sector’s first job gain since January. Parts of this industry are affected by U.S. demand for exports and have faced disruption from the United States’ tariff campaign in recent months.
Manufacturing, another tariff-sensitive industry, posted its second consecutive month of modest job gains with 5,300 positions added in July. On a year-over-year basis, employment in manufacturing is still down by 9,400 jobs.
StatCan said the layoff rate—the proportion of people employed in June but laid off in July—was virtually unchanged at 1.1% from the same month a year ago despite the uncertainty tied to trade and U.S. tariffs. But many of those looking for work are struggling to land a job, the agency noted.
BoC to weigh weak jobs data ahead of interest rate decision
Of the 1.6 million people who were jobless in July, 23.8% were in long-term unemployment, meaning they’ve been on the job hunt for 27 weeks or more. StatCan said that’s the highest share of long-term unemployment since February 1998, again excluding the pandemic. Average hourly wages meanwhile rose 3.3% on an annual basis in July, up a tick from June.
