Canada’s labor market shed 41,000 jobs in July, falling short of economists’ expectations for modest growth, according to a new report from Statistics Canada.
The unemployment rate was unchanged month-over-month at 6.9%.
Analysts were expecting the economy to add 13,500 jobs and that the unemployment rate would tick up to 7%.
Average hourly wages increased 3.3% year-over-year in July, to $36.16, a slight uptick from the 3.2% gain in June
During July, employment contracted led a 51,000 decrease in full-time jobs concentrated in the private sector.
Youth aged 15 to 24 bore the brunt of the decline, losing 34,000 jobs in July. Their employment rate fell to 53.6%, the lowest level for this age group since 1998, excluding pandemic years. The youth unemployment rate rose to 14.6%, its highest since 2010.
Job losses spanned multiple sectors. Information, culture, and recreation shed 29,000 positions, while construction fell by 22,000.
Business, building, and other support services saw their third decline in four months, and health care employment dropped by 17,000, reversing a similar gain from June.
Offsetting some of the weakness, transportation and warehousing added 26,000 jobs, the first gain in the sector since January. Manufacturing also posted a modest increase of 5,300, though it remains down year-over-year.
While the headline unemployment rate remained unchanged, underlying indicators suggest mounting strain. Nearly one in four unemployed Canadians have been out of work for 27 weeks or longer, the highest level of long-term unemployment since 1998 outside of COVID years.
Labour force participation also declined, with 33,000 fewer people working or actively seeking work in July. The participation rate dropped to 65.2%, down 0.2% month-over-month.
The weaker-than-expected jobs report adds to the case for the Bank of Canada to ease interest rates, but it is unlikely to trigger immediate or aggressive action.
It is expected that the Bank of Canada will hand down two 25-basis-point rate cuts by the year-end. The central bank’s benchmark rate currently stands at 2.75%.