Canada’s labor market posted significant gains in July, adding 75,100 positions and pushing the unemployment rate down to 6.4 percent. This represents the lowest jobless level since July 2024. Economists expected much smaller growth, making this result a notable surprise that highlights the underlying strength of the Canadian economy.
The gains appeared across both full-time and part-time sectors. Private sector hiring drove much of this momentum, with clear strength reported in wholesale and retail trade, finance, insurance, and professional services. This marks the third consecutive month that the unemployment rate has declined, offering further proof that domestic businesses are adjusting to trade pressures and global economic uncertainty.
While the job market shows clear signs of recovery, experts note that it has not yet reached full health. Average hourly wages for permanent employees grew by 3.0 percent in July, a slight slowdown from the 3.7 percent increase seen in June. This wage growth pace is the lowest recorded since early 2022.
The Bank of Canada previously identified signs that the economy is managing the impact of international trade tensions and U.S. tariffs effectively. Projections suggest second-quarter growth could hit 3.4 percent, which would be the highest quarterly gain in three years. Despite these positive indicators, money markets currently do not expect interest rate hikes from the central bank until next year.
The Canadian dollar reacted positively to the report, strengthening 0.4 percent against the U.S. dollar to reach an eight-week high. Analysts remain optimistic about the current trajectory, noting that the July data provided very few negative signals for the broader economy.