Canadian economy sheds almost 41,000 jobs in July, unemployment rate remains steady

The Canadian economy lost thousands of jobs in July, sinking the share of people employed in the population to an eight-month low, data showed on Friday, as the labour market gave back substantial gains seen in the prior month.

The unemployment rate, however, remained steady but at a multi-year high level of 6.9 per cent, Statistics Canada said.

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The economy shed 40,800 jobs in July as against an net addition of 83,000 jobs in June, taking the employment rate, or the percentage of people employed out of the total working age population, to 60.7 per cent, the agency said.

The employment rate was the lowest since the pandemic and the loss of jobs was concentrated amongst permanent employees, Statscan said.

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Analysts polled by Reuters had forecast that the economy would add 13,500 jobs and the unemployment rate to tick up to 7 per cent.

The bulk of the job losses occurred amongst youth, primarily aged 15 to 24 years, whose unemployment rate edged up to 14.6 per cent in July, the highest rate since September 2010 barring the pandemic years of 2020 and 2021.

The youth unemployment rate usually higher than the country’s average. The employment rate amongst this group sank to 53.6 per cent, lowest since November 1998 if pandemic years are excluded.

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Statscan said that the youth were finding it tough to land a job in the current economic environment.

U.S. President Donald Trump’s sectoral tariffs on steel, aluminum and auto have hit the manufacturing sector hard. It has already rippled across other sectors, hurting hiring intentions of companies, the Bank of Canada has previously said.

But the malaise of tariffs have not spiralled into a total meltdown of the jobs sector and employment else where has held up well, data showed.

Overall, there has been little net employment growth since the beginning of the year, Statscan said, but clarified that the layoff rate was virtually unchanged at 1.1 per cent in July compared with 12 months earlier.

The biggest decline in employment was observed in information, culture and recreation which lost 29,000 jobs, followed by 22,000 fewer jobs in construction and 19,000 jobs lost in business, building and other support services.

Employment rose in transportation and warehousing by over 26,000 or a jump of 2.4 per cent in July.

The average hourly wage of permanent employees – a gauge closely tracked by the Bank of Canada to ascertain inflationary trends – grew by 3.5 per cent in July from 3.2 per cent to $37.66.