Canada’s labor market posts surprising job losses, youth hit hardest

Investing.com -- Canada’s labor market contracted more sharply than expected in July, with the economy shedding 41,000 jobs, reversing part of June’s solid gains. The employment rate dropped 0.2 percentage points to 60.7%, while the unemployment rate held steady at 6.9%, undercutting estimates of a rise to 7%.

Losses were concentrated among young workers aged 15 to 24, down by 34,000 positions or 1.2%, marking the steepest setback for that cohort in years. The youth employment rate slipped to 53.6%, the lowest since November 1998 outside pandemic years, and the unemployment rate for the group climbed to 14.6%, a level not seen since 2010.

Industry-specific weakness was led by information, culture and recreation, which fell by 29,000 jobs, and construction, which lost 22,000 positions. Business, building and other support services also posted a third decline in four months, while health care and social assistance reversed June’s gains.

Regionally, Alberta and British Columbia saw significant pullbacks, losing 17,000 and 16,000 jobs respectively, with accompanying upticks in unemployment. Saskatchewan was the only province to post an increase, adding 3,500 jobs, pushing its unemployment rate down to 5%, the lowest in the country.

Despite the headline losses, wages continued to advance, with average hourly earnings rising 3.3% from a year earlier to $36.16. Total (EPA:TTEF) hours worked were little changed on both a monthly and annual basis, signaling softening activity despite labor cost pressures.

Long-term joblessness remains a concern, with 23.8% of unemployed Canadians having been without work for 27 weeks or more, the highest share since 1998 outside the pandemic period. Participation in the labor force also edged lower, dipping to 65.2%, suggesting a growing number of Canadians have stepped back from active job searches.

Some sectors showed resilience, notably transportation and warehousing, which added 26,000 jobs, its first gain since January. Employees in industries such as health care and educational services reported the greatest confidence in job prospects, while those in trade-sensitive areas showed heightened concerns over layoffs and tariff uncertainty.

The figures underscore a labor market in transition, with uneven conditions across sectors and demographics. While overall unemployment remains below expectations, the concentration of losses among younger workers and weakness in key industries may temper optimism about the second half of the year.