Wednesday, October 8, 2025

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Canada’s Labour Market Recovery Falls Short of Expectations in July

Canada’s economy continued its rebound in July amid strong vaccination efforts, but the latest labour market gains still failed to meet expectations.

According to Statistics Canada, the country’s economy added a total of 94,000 new jobs in July, an increase of 0.5% from the previous month, causing the unemployment rate to fall from 7.8% to 7.5%. However, economists polled by Bloomberg forecasted an increase of 150,000 jobs, suggesting that the pace of hiring may be losing momentum, despite the reopening of the economy and the lifting of restrictions.

All of July’s employment gains occurred across the private sector, mostly in full-time work. Combining the labour market growth in June and July, employment levels are only 1.3% below the pre-pandemic levels of February 2020. Similarly, the proportion of Canadians working from home has fallen to the lowest since October 2020, suggesting that workplaces are beginning to phase out Covid-19 related remote work arrangements.

Last month’s employment gains were also largely concentrated in the services-producing sector, with increases reported across the accommodation and food services, and finance, insurance, real estate, rental and leasing sectors. Conversely, the retail trade and information, culture and recreation sectors noted little gains in July.

Although the labour market fell short of consensus, the latest figures are not expected to have a significant impact on the Bank of Canada’s plans to begin tapering its monetary support. According to economists cited by Bloomberg, the economy could be slated for an interest rate hike as early as next year. “It may be a headline miss in terms of the numbers, but having more full-time jobs created is definitely a good sign for the economy and certainly keeps the momentum building,” explained RBC deputy chief economist Dawn Desjardins.

Following the report, the Canadian dollar fell to $1.256 per US dollar.


Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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