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Canada’s labour market showed unexpected strength in June, adding 83,000 jobs—marking the first monthly employment increase since January. The national unemployment rate edged down to 6.9%, reversing a three-month upward trend.
The job gains were concentrated in part-time positions (+70,000) and among core-aged workers aged 25 to 54, who saw record-level increases in employment (+90,600). That pushed their unemployment rate down to 5.8%.
Most of the job growth came from the private sector, while public sector and self-employment numbers also rose. Industries seeing the biggest gains included wholesale and retail trade (+34,000), health care and social assistance (+17,000), and manufacturing (+10,500), which broke a four-month losing streak.
Wage growth slowed slightly to 3.2% year-over-year, pointing to easing labour market pressures despite the strong headline number.
At the regional level, Alberta, Ontario and Quebec led the way in job creation. However, unemployment remained high in Ontario (7.8%), while British Columbia posted a sharp drop to 5.6%, thanks to a decline in labour force participation.
Despite broader job gains, younger Canadians continue to face challenges. The unemployment rate for returning students aged 15 to 24 climbed to 17.4% in June, the highest for that month since 2009, excluding the pandemic period.
What this means for interest rates
Economists are split on whether this report will change the Bank of Canada’s course at its next meeting on July 30.
"This is a very solid report, especially compared to expectations for material weakness,” noted BMO’s Benjamin Reitzes. Still, he cautioned that the stronger data may be met with some skepticism given broader economic uncertainty and lagging productivity.
TD’s Leslie Preston agreed the labour market is showing resilience, but said it won’t be enough to "turn the page” on a much cooler trend overall. "We think a strong argument for further rate cuts remains in Canada,” she added, pointing to inflation as the bigger deciding factor. June’s CPI report, due July 16, will likely be pivotal in shaping the Bank's decision.
For now, the BoC may prefer to wait—especially with fresh trade tensions looming, after former U.S. President Donald Trump renewed threats of a 35% tariff on Canadian goods.
All eyes are now on next Tuesday’s inflation print. If price pressures continue to ease, it could tip the scales toward a second rate cut—which would be good news for variable-rate borrowers and those renewing in the second half of 2025.
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