July employment gains and a lower jobless rate signal gradual labor market improvement despite modest 2026 growth forecasts.
Canada’s labor market strengthened in July with a 75,000 employment gain, following 106,000 increases in May and June. The unemployment rate dropped to 6.4%, its lowest in two years, down half a percentage point from a year ago.
Average monthly job growth for 2026 remains modest at 10,000, reflecting a soft start to the year. The improvement occurs alongside slower population growth, elevated retirements, and easing energy prices, though U.S. tariff risks persist.
The unemployment rate, a key measure of labor market conditions, is expected to edge lower in the second half of the year despite ongoing uncertainties.