Key points:

  • The Canadian labour market withstood the trade war’s hit to US-exposed sectors in Q2 2025, but continued slow hiring pushed the unemployment rate up somewhat to 6.9% in June.
  • Slower population growth from abroad has weighed on job growth, and is likely leading to mixed signals in Statistics Canada’s different labour market data.
  • The job vacancy rate slipped from 2.9% in March to 2.7% in May, and is now notably below its pre-pandemic level of 3.4% (Indeed job postings have been steadier). The recent drop has been broad-based, with public sector-related industries, including healthcare, joining in the decline.
  • The gradual softening of the labour market was apparent in cooler wage growth over the second quarter (particularly in the private sector). According to the Indeed wage tracker, advertised wages and salaries eased from 3.0% year-over-year growth in Q1 to 2.7% in Q2. 

From a bird’s-eye view, it was business as usual for the Canadian labour market in the second quarter of 2025. Conditions softened between March and June, but most developments reflected a continuation of recent years rather than a dramatic shock to the system from the trade war. On closer inspection, however, policy change — around the Canada-US trade relationship, immigration, and public sector hiring and wage trends — left imprints that will continue to shape the labour market going into the second half of the year.    

Employment started the quarter flat before a surprisingly strong June, according to the Labour Force Survey (LFS). The unemployment rate evolved similarly, rising from 6.7% to 6.9% — not a positive trend, but less sharp than the increases seen throughout much of 2024. 

Line chart titled “The unemployment rate edged up in Q2 2025” shows the Canadian unemployment rate between January 2022 and June 2025. The unemployment rate rose from 6.7% to 6.9% between March and June, a somewhat slower pace of increase than throughout much of 2025. 
Line chart titled “The unemployment rate edged up in Q2 2025” shows the Canadian unemployment rate between January 2022 and June 2025. The unemployment rate rose from 6.7% to 6.9% between March and June, a somewhat slower pace of increase than throughout much of 2025. 

The trade war (and its surrounding uncertainty) has clearly impacted job growth. Employment in each of the three largest trade-exposed industries — manufacturing, transportation and warehousing, and natural resources — slipped between 1% and 2% from March. But overall, the declines haven’t been widespread across industries, nor sharp enough within impacted areas, to offset gains in other industries like information and recreation, finance, and retail trade. Sectors and regions (like Windsor) most vulnerable to US trade disruptions have taken a hit, but it hasn’t spilled over elsewhere.  

Scatterplot titled “Jobs have slipped recently in trade-exposed industries” shows industry-level job growth since February 2020 on the x-axis and 3-month growth for June 2025 on the y-axis. Employment fell in industries like manufacturing and transportation, and warehousing, but these declines were offset by gains elsewhere. 
Scatterplot titled “Jobs have slipped recently in trade-exposed industries” shows industry-level job growth since February 2020 on the x-axis and 3-month growth for June 2025 on the y-axis. Employment fell in industries like manufacturing and transportation, and warehousing, but these declines were offset by gains elsewhere. 

Job churn showed familiar trends and a rise in trade-exposed layoffs

Despite the overall labour market holding on, the driver of the gradual softening persists: hiring remains slow. New hires accounted for 1.9% of employees in Q2 2025, similar to the last two years, but down 20% from its pre-pandemic average. The weakness was widespread, with the hire rate down from pre-pandemic 2017-2019 averages across all industries except information, culture and recreation, forestry, and public administration (the latter boosted by temporary election-related hiring). 

Two-panel line chart titled “Hiring and layoffs remained below pre-pandemic rates in Q2” shows the share of Canadian employees who started a new job, or were laid off or discharged, with four lines in each panel, representing the monthly rate in 2023, 2024, 2025, and the average over 2017-2019. Both measures of labour market dynamics were below their pre-pandemic norms throughout Q2. 
Two-panel line chart titled “Hiring and layoffs remained below pre-pandemic rates in Q2” shows the share of Canadian employees who started a new job, or were laid off or discharged, with four lines in each panel, representing the monthly rate in 2023, 2024, 2025, and the average over 2017-2019. Both measures of labour market dynamics were below their pre-pandemic norms throughout Q2. 

Once again, though, low layoff rates limited the drag from weak hiring. The share of employees newly out of work due to layoff or discharge averaged 0.7% in Q2, similar to 2023-2024 and 17% lower than the 2017-2019 average. But the three (of 21 total) industries that did post higher layoff rates in Q2 compared to pre-pandemic levels — wholesale trade, durable goods manufacturing, and transportation and warehousing, each heavily involved in exporting goods — suggest the effects of the trade war are showing up below the surface. 

Slower population growth is now impacting the job numbers 

Slower population growth is also impacting job growth, following earlier changes to immigration policies after a post-pandemic jump in newcomers from abroad. According to the official population estimates, the number of people in Canada was essentially flat over the first quarter of 2025, a sharp deceleration from the rapid 2.5% annualized, non-seasonally adjusted growth seen a year earlier. Annualized growth in the adult population estimate used in the LFS — which tends to evolve more gradually than the official data — has also slowed, from 3.9% in Q2 2024 to 1.6% this year.  

Line chart titled “Population growth has slowed, but the shift has been sharper in the official data” shows net population growth in Canada between January 2018 and Q2 2025, according to the official, and LFS estimates. While growth of both series have eased since 2024, the official data has decelerated more sharply. 
Line chart titled “Population growth has slowed, but the shift has been sharper in the official data” shows net population growth in Canada between January 2018 and Q2 2025, according to the official, and LFS estimates. While growth of both series have eased since 2024, the official data has decelerated more sharply. 

Slower population growth directly influences the LFS employment numbers, which over the first half of 2025 grew at the slowest pace since the end of the pandemic. However, slower population growth also means a lower “breakeven” pace of job gains required to keep metrics, including unemployment and employment rates, stable. This explains why the unemployment rate deteriorated more quickly over several periods in 2024, despite simultaneously faster employment growth. 

The discrepancy between the official population estimate and the LFS’s has also impacted reported job growth. In particular, the delayed response of the LFS to real-time population swings means actual employment growth has likely slowed even faster than reported. Consistent with this, StatCan’s Survey of Employment, Payrolls, and Hours (SEPH) — which tracks jobs by tallying employment insurance deduction forms sent to the government, without relying on a population estimate — has been reporting slower payroll growth than LFS employment, with essentially no change in payrolls between December and May. However, after dividing SEPH payrolls by the official population estimate (creating an implied “SEPH employment rate”), recent changes in the LFS’ employment-to-population ratio look quite similar. 

Line chart titled “Recent SEPH and LFS trends look similar after adjusting for different population assumptions” shows the official LFS employment rate and SEPH implied employment rate based on the official population estimate, both indexed to equal 100 in Q3 2023. After adjusting for different base-populations, the two series have evolved similarly over the past two years. 
Line chart titled “Recent SEPH and LFS trends look similar after adjusting for different population assumptions” shows the official LFS employment rate and SEPH implied employment rate based on the official population estimate, both indexed to equal 100 in Q3 2023. After adjusting for different base-populations, the two series have evolved similarly over the past two years. 

The recent flatlining in population doesn’t appear to have been particularly disruptive to the labour market, in part because it’s primarily led by falling inflows of newcomers to Canada. However, the bigger wildcard is what happens as outflows — already on an upswing — continue to rise as the work visas of non-permanent residents expire. Anecdotally, the prospect of some existing workforce leaving Canada is a topic of significant discussion among human resources leaders across a wide range of sectors, with adjustment strategies varying based on the specific circumstances of individual businesses. 

Job vacancies slipped in Q2, but with less of a clear link to the trade war

After holding surprisingly steady to start 2025, employer job vacancies declined in both April and May. The job vacancy rate stood at 2.7% in May, down from 2.9% in March and 3.4% before the pandemic. This weakness stands in contrast to recent job posting trends on Indeed, which have remained stable in 2025 and are only slightly below their pre-pandemic level (-2%). Some of this recent divergence could reflect trends in sectors where online job postings aren’t as representative of employer demand, like natural resources and public education.

Line chart titled “Job vacancies weakened more than postings in Q2” shows the level of Canadian job postings and job vacancies, between February 2020 and July 2025, both indexed to equal 100 in February 2020. After tracking similarly, employer job vacancies slipped in Q2 2025, while job postings held steady, resulting in vacancies being down 17% from their pre-pandemic level, while postings were down 2%. 
Line chart titled “Job vacancies weakened more than postings in Q2” shows the level of Canadian job postings and job vacancies, between February 2020 and July 2025, both indexed to equal 100 in February 2020. After tracking similarly, employer job vacancies slipped in Q2 2025, while job postings held steady, resulting in vacancies being down 17% from their pre-pandemic level, while postings were down 2%. 

Overall, the recent weakness in StatCan job vacancies has been broad-based, and unlike the employment data, trade-exposed sectors (particularly manufacturing) have evolved similarly to others. Business sentiment was weak throughout the economy in Q2, so it’s not surprising that some firms put hiring plans on hold. Across the private sector (from construction to finance to retail), declining job openings have been the norm since 2022. However, some industries that have seen the fastest declines in vacancies over the past year are in public-sector related areas, like healthcare (the largest of the group), education, and public administration, which had previously been holding well above pre-pandemic levels. This suggests the strong public sector job gains of recent years are set to slow. 

Line chart titled “Vacancies in public sector related industries are dropping from elevated levels” shows the change in job vacancies since February 2020 among public sector related industries, trade-exposed industries, and the rest of the economy, through May 2025. Vacancies in trade-exposed industries have been evolving similarly to the rest of the economy, and have been lower than pre-pandemic levels since 2024. Public sector related industries were quite elevated, but have been falling faster more recently. 
Line chart titled “Vacancies in public sector related industries are dropping from elevated levels” shows the change in job vacancies since February 2020 among public sector related industries, trade-exposed industries, and the rest of the economy, through May 2025. Vacancies in trade-exposed industries have been evolving similarly to the rest of the economy, and have been lower than pre-pandemic levels since 2024. Public sector related industries were quite elevated, but have been falling faster more recently. 

Weaker demand is contributing to easing posted wage growth, while other measures are gradually following suit

The growth of Canadian paychecks hasn’t followed the same ups and downs of the broader labour market in recent years. Official measures of hourly wages, adjusted for changing jobs-mix, were up between 3.7% (SEPH) and 3.8% (LFS) year-over-year, according to the most recent Q2 data, somewhat slower than Q1’s 4.2% growth in both, but still well above Canada’s 1.9% June inflation rate. Still-elevated public sector wage growth, which was slow to react to pandemic-era inflation, has partially offset a more notable deceleration of private sector pay gains. 

Line chart titled “Hourly wage growth still solid, but advertised pay for new hires growing slower” shows year-over-year growth composition adjusted hourly wages according to SEPH, the LFS, and the Indeed Wage Tracker between March 2019 and June 2025. SEPH and LFS wage growth ticked down in Q2 but remain solid, while posted wage growth has slowed further, up 2.7% in June 2025. 
Line chart titled “Hourly wage growth still solid, but advertised pay for new hires growing slower” shows year-over-year growth composition adjusted hourly wages according to SEPH, the LFS, and the Indeed Wage Tracker between March 2019 and June 2025. SEPH and LFS wage growth ticked down in Q2 but remain solid, while posted wage growth has slowed further, up 2.7% in June 2025. 

Conversely, growth of advertised wages and salaries in job postings has been steadily slowing, more closely resembling the gradual labour market cooling of recent years. The Indeed Wage Tracker rose at an average 2.7% year-over-year pace in Q2 2025, down from 3.0% in Q1 and well below its nearly 5% peak in mid-2022. Posted wage growth is still a bit higher than its pre-pandemic level — unlike job postings themselves — but the downward trend highlights how overall job market dynamics have shifted in employers’ favour in recent years. 

These patterns have been fairly consistent across job titles. Dividing occupations into wage tiers based on their median posted wages (excluding healthcare occupations), posted wage growth peaked across the board in 2022, before easing at different points between 2023 and 2024. Over the three months through June, advertised wage growth stood at 2.9% among both mid-paying occupations (e.g., administrative assistance, construction), as well as higher-paying roles (e.g., accounting, management). Lower-paying roles (like loading and stocking and food service), which had been trending similarly, have eased somewhat faster in 2025, dropping to 2.0% as of June. 

Four-paneled line chart titled “Posted wage growth has eased more among low-paying occupations, still elevated for healthcare jobs” shows the evolution of the Indeed wage tracker, with each panel showing posted wage growth from high-, mid-, and low-paying occupations, as well as healthcare occupations, between 2019 and June 2025. Posted wage growth has eased, following the economy-wide average, across the pay spectrum, though low-paying jobs have slipped more recently. However, posted wages are currently growing stronger among healthcare jobs, after lagging earlier. 
Four-paneled line chart titled “Posted wage growth has eased more among low-paying occupations, still elevated for healthcare jobs” shows the evolution of the Indeed wage tracker, with each panel showing posted wage growth from high-, mid-, and low-paying occupations, as well as healthcare occupations, between 2019 and June 2025. Posted wage growth has eased, following the economy-wide average, across the pay spectrum, though low-paying jobs have slipped more recently. However, posted wages are currently growing stronger among healthcare jobs, after lagging earlier. 

Trends in advertised wages of healthcare jobs look much different. Rather than rising amid the tight labour market of 2021-2022, posted wages of healthcare jobs remained relatively flat, only jumping in late 2023 and again this year, standing at 3.7% in Q2 2025. In June 2025, six of the nine occupations with year-over-year posted wage growth above 3.5% were in the healthcare field. As with both job openings and employment, wage trends in the healthcare sector follow unique patterns, reflecting both the drivers of demographic demand and the evolution of collective bargaining agreements, which cover over half of the employees in the sector.  

Still on the edge, while familiar challenges persist

The Canadian labour market was able to make it through a daunting first half of 2025 largely intact. So far, the major vulnerability facing the employment situation — that the trade war and surrounding uncertainty would cause a jump in layoffs — has been confined to the most US-exposed sectors, limiting the recent rise in unemployment. Instead, slow hiring persists across the economy, leaving conditions challenging for job seekers across a range of circumstances. These trends are also filtering into wage growth, which is now on the wane, with the exception of public-sector related areas like healthcare.  

What this all means for the second half of the year is still up in the air. The trade policy situation appears to have somewhat stabilized (at least until the USMCA trade deal comes up for renegotiation), though the negative employment effects of tariffs already in place likely haven’t fully materialized. In this context, it’s difficult to expect sufficient momentum in other sectors to reverse the cooling employment situation that has persisted over the past two years. Instead, hopefully, the labour market can continue to tread water until the economic outlook improves. In the background, employers will likely be increasingly adjusting to a slower population growth environment, as work visas among non-permanent residents expire.  

Methodology

All job postings figures in this blog post are the index of seasonally adjusted Canadian job postings on Indeed, rebased to February 1, 2020, using a seven-day trailing average. 

The number of job postings on Indeed, whether related to paid or unpaid job solicitations, is not indicative of potential revenue or earnings of Indeed, which comprises a significant percentage of the HR Technology segment of its parent company, Recruit Holdings Co., Ltd. Job posting numbers are provided for information purposes only and should not be viewed as an indicator of performance of Indeed or Recruit. Please refer to the Recruit Holdings investor relations website and regulatory filings in Japan for more detailed information on revenue generation by Recruit’s HR Technology segment.

To calculate fixed-weight wage growth in the LFS, we bucket LFS microdata for each of the 43 occupation groups into three levels of job tenure (6 months or less, 7 to 24 months, and 25 months and over), and recalculate headline average wages into a composition-adjusted measure by holding their respective weights constant at February 2020 levels.

Posted wage growth by wage tier reflects posted median wage growth of groups of occupations based on their median 2021 advertised pay, excluding healthcare occupations, which are calculated separately.