'July threw some cold water on the Canadian job market, after getting off to a hot summer in June'
Canada’s job market experienced the largest decline in employment in July since the end of the pandemic, dropping by 41,000, reversing about half the increase from the month prior.
This reduction comes after a particularly strong June, suggesting that the Canadian labour market may be facing some turbulence in the face of global uncertainty and sector-specific struggles, according to Brendon Bernard, senior economist at Indeed Canada.
“The employment drop came at a time of heightened trade uncertainty for the Canadian economy, but many of the details of the weak numbers resemble trends that’ve weighed on the labour market over the past few years, rather than a new shock to the system,” he says.
While the national unemployment rate held steady at 6.9% in July, the drop in employment suggests that the labour market is cooling off.
Youth employment struggles and full-time job losses contribute to decline
According to the latest Labour Force Survey from Statistics Canada, this decline was driven mainly by a drop in youth employment, with 34,000 fewer jobs for those aged 15 to 24. This age group saw the largest drop in terms of percentage, with a decrease of 1.2% in employment.
Notably, employment among core-aged workers (25 to 54 years old) and older workers (55+) remained largely unchanged in July, suggesting that the weakening job market is impacting younger job seekers more significantly, a concerning trend that has persisted over the past few months.
In terms of hours worked, the decline in full-time positions was a key factor contributing to the overall drop.
“What didn’t change was the unemployment rate, which held steady at 6.9%. Instead, the weak numbers showed up in a decline in labour force participation, as job search activity among those out of work slipped,” says Bernard.
Job loss by sector, region
The sectoral breakdown of job losses reveals some concerning trends. Jobs in the information, culture and recreation sector saw a sharp decline of 29,000 (-3.3%), while construction, a sector that had seen steady growth in recent years, also experienced a downturn, losing 22,000 jobs.
The losses in these industries reflect broader patterns within the Canadian economy. While certain sectors continue to face challenges, others, like manufacturing, held steady during the month.
This is supported by the fact that losses were concentrated in Alberta (-0.6%) and BC (-0.5%), while manufacturing-exposed Ontario and Quebec held steadier at +0.3% and +0.5% respectively.
Weak July numbers highlight ongoing struggles for job seekers
The overall employment figures underscore the challenges faced by those on the margins of the labour market. Bernard emphasizes that weak hiring remains the primary issue, with few signs of widespread layoffs.
"July threw some cold water on the Canadian job market, after getting off to a hot summer in June," Bernard says. "Rather than rising layoffs, weak hiring remains the primary drag on the employment situation. As a result, job seekers on the margins of the labour market continue to struggle."
While the weak July numbers are not as severe when viewed in the context of June's strong numbers, these paint a somewhat bleak picture of the market job seekers are currently faced with, according to Bernard.
