EconoFACTS

August 07, 2026 | 09:22

Cdn. Jobs: Not Just Surviving, But Thriving...Wait, What?

Economist

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter brings more than three decades of experience analyzing gl... (Read more)

Douglas Porter , CFA

Chief Economist and Managing Director
Economics

Douglas Porter brings more than three decades of experience analyzing gl... (Read more)

Canadian employment defied the skeptics (okay, including us) by jumping 75,100 in July, extending a series of surprisingly solid results after a stumbling start to the year. Details were not quite as impressive as the rollicking headline tally, but still quite firm overall. Gains were nearly split between full-time (+38.6k) and part-time positions (+36.6k). And while retail trade and various other services led the way, there were also solid advances in construction and manufacturing. Self-employment (+44.4k) did account for over half of the overall increase, but private sector jobs still rose by 57.9k, offset by a 27k drop in public sector jobs (a rarity, and echoing the big drop seen stateside in July). Decisively, total hours worked rose 0.6% m/m in July, which, long with the momentum in prior months, points to a very strong result for Q3 of nearly a 4% annualized increase. That's a precursor to GDP growth, and note that we just bumped up our estimate of Q2 to a 3.8% annual rate.

The Bank of Canada will view this report as a further tightening in the job market. First, the unemployment rate dipped yet again by a tick to 6.4%. That's down a half a point just since the spring, and compares to the nearby high of 7.1%, hit as recently as last September. To put that in perspective, the labour force has only grown by 91,200 people over the past year, or less than 8,000 a month—so it doesn't take much in the way of job gains to carve down that jobless rate. Meantime, the employment rate (the share of the adult population with a job) ticked higher for the third consecutive month to 60.9%. StatCan reports that the summer job market for youth is better than last year, and, more broadly, that "a higher proportion of people searching for work have been finding jobs compared with last year"—the job finding rate is 20.8% in the past two months versus 18.5% a year ago. Yet, offsetting these trends, average hourly wages simmered down to a 2.8% y/y clip from 3.3% last month, the slowest in four years and in line with pre-pandemic trends.

By sector: The biggest increase was found in retail & wholesale trade (+21.1k), but there were plenty of other double-digit gains, including finance (+18k), professional & technical (+16.6k), and the previously noted gains in construction (+15.7k) and manufacturing (+11.1k). The major down-note was sounded by public administration (-14.5k), which reflects the underlying slowing trend amid federal government restraint and perhaps a pullback from a short-term bump in Census hiring. Hospitality sectors were a bit soft as well, as the World Cup boost faded fast. Surprisingly, natural resource sectors were also down, but remain sturdy on a yearly basis.

By region: Ontario led the gains at +51.6k; even though it is arguably facing the biggest challenge from the U.S. tariffs, it has reported job growth of 1.3% y/y, a bit above the national average of +0.9%. Its jobless rate dipped two ticks, but remains a bit higher than the Canada norm at 6.8%. B.C. also had a good month (+17.8k), slicing its jobless rate 3 ticks to 6.2%. While Alberta stepped back 7.3k in July, it has still seen the strongest growth in the past year at 3.5%, followed by PEI, Nova Scotia and Manitoba. On the flip side, while Quebec eked out a job gain in July (+0.7k), overall employment has dipped 0.6% y/y, with yearly declines also reported in Saskatchewan, New Brunswick and Newfoundland. Despite those very big differences in job growth in the past year, unemployment rates across the country are extraordinarily tight (outside of NF), with a spread of just 2 ppts from high to low.

Bottom Line: Landing on day of a soft U.S. payroll result, the contrast with Canada's surprisingly upbeat reading is stark. Not unlike the GDP bounce from weakness at the turn in the year, the job figures are very much echoing the rebound. But, perhaps also like the GDP results, the recent job growth likely exaggerates the underlying strength in the economy. Even with the flashy headlines, we suspect that the yearly trend in both is more indicative of economic reality—job growth of just under 1% y/y and GDP growth of just under 2% y/y. Still, the big July gains are a hint of building momentum after the Q2 rebound, even as trade uncertainty still looms over the outlook. With wage growth taming further and energy prices more moderate, the BoC won't take on a more hawkish tone yet, though a strengthening economic backdrop will could eventually push them in that direction if it persists.

Table 1 - Canada — Employment

(change in thousands)

Source: BMO Economics, Haver Analytics