OTTAWA — The Canadian economy shed some 41,000 jobs in July as young workers and the private sector bore the brunt of the losses, Statistics Canada said Friday.
The unemployment rate held steady at 6.9 per cent as the number of job seekers was roughly unchanged from June.
The economy lost 51,000 full-time positions in July, and StatCan said the bulk of the losses were in the private sector.
July's drop in jobs partially offsets an unexpected gain of 83,000 positions in June.
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 per cent 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 per cent – 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.
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 per cent 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.
Of the 1.6 million people who were jobless in July, 23.8 per cent 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 per cent on an annual basis in July, up a tick from June.
The Bank of Canada will be gauging the strength of the labour market as it prepares for its next interest rate decision on Sept. 17.
The central bank left its policy rate unchanged at 2.75 per cent in its decision last week.
CIBC senior economist Andrew Grantham said in a note Friday that the "weaker than expected" employment figures support his call for a quarter-point cut at the Bank of Canada's September meeting.
The central bank will have a look at another set of jobs data for August, as well as a pair of inflation reports and a quarterly GDP update before its next interest rate decision.
This report by The Canadian Press was first published Aug. 8, 2025.
Craig Lord, The Canadian Press
