Canada experienced a surge in job creation in July, with the addition of 75,000 jobs, marking a 0.4% increase and driving the unemployment rate down to 6.4%, its lowest level in two years. According to Statistics Canada’s latest labor force survey, the majority of these job gains were distributed between full-time and part-time positions, with the wholesale and retail trade sector alone contributing 21,000 new jobs.

Employment growth was particularly notable among individuals aged 25 to 54, especially for women in this age bracket. The unemployment rate for men aged 25 to 54 remained steady at 5.8%, while it dropped to 5.2% for women in the same age group. Ontario led the provinces in job creation, adding 52,000 jobs in July, primarily in the professional, scientific, and technical services sector. British Columbia also saw a significant increase with 18,000 new jobs.

Manitoba and Nova Scotia experienced notable employment rate increases, with Manitoba recording a 0.8% rise and adding 5,900 jobs, while Nova Scotia saw a similar 0.8% increase, thanks to the addition of 4,600 jobs. Since April, Canada has gained 181,000 jobs, and compared to a year ago, the country has added 196,000 jobs. The positive momentum in July follows encouraging job reports from May and June.

CIBC senior economist Andrew Grantham praised the job growth as surpassing expectations, attributing it to robust hiring in July. The summer job market for students was reported to be stronger than in the past two years, with the unemployment rate for youth aged 15 to 24 reaching its lowest level since early 2024. However, disparities were noted among racialized youth, with varying unemployment rates, including 22.6% for Black youth, 15.4% for Chinese youth, and 13.9% for South Asian youth, compared to 11.6% for non-racialized and non-Indigenous youth.

Despite the overall unemployment rate dropping to 6.4%, Grantham highlighted that it remains slightly higher than full employment levels. BMO chief economist Douglas Porter noted a modest increase in job gains, contributing to a decline in the jobless rate. However, he mentioned a slowdown in average hourly wage growth to 2.8% year over year, the slowest rate in four years and in line with pre-pandemic trends.

Economists observed signs of stabilization in the labor market following a mild contraction in the first quarter, with businesses adapting to trade-related uncertainties. While Canada’s economy is projected to have performed better in the second quarter, potential trade challenges loom on the horizon, including U.S. President Donald Trump’s proposed 50% tariffs on Canadian imports. Canada is advocating for tariff reductions and seeking relief from sectoral tariffs on key industries like steel and aluminum. Discussions on the Canada-United States-Mexico Agreement are set to resume in the coming months.