After getting off to a hot summer in June, July threw cold water on the Canadian job market. Employment fell at its fastest pace since the end of the pandemic, reversing about half the increase from the month prior. Hours worked fell similarly, as full-time positions led the decline. What didn’t change was the unemployment rate, which held steady at 6.9%. Instead, the weak numbers showed up in a decline in labour force participation, as job search activity among those out of work slipped.
The employment drop came at a time of heightened trade uncertainty for the Canadian economy. However, the details of the weak numbers resemble trends that’ve weighed on the labour market over the past few years, rather than a new shock to the system. Manufacturing jobs were roughly unchanged, the weakness coming from information, culture, and recreation (which had been fairing well recently), as well as construction. Losses were also concentrated in Alberta and BC, while manufacturing-exposed Ontario and Quebec held steadier.
Rather than rising layoffs, weak hiring remains the primary drag on the employment situation. As a result, job seekers on the margins of the labour market continue to struggle. Unemployed Canadians are finding it tougher to return to work, and the youth unemployment rate rose further, to 14.6%. While the weak July numbers aren’t too severe in the context of the surprisingly strong June (overall employment growth has averaged 17,000 per month since April), they nonetheless highlight the labour market’s ongoing funk — particularly facing job seekers — that’s shown little sign of turning around.
