‘Not yet strong’: Canada adds surprise 75,000 jobs in July but recovery still ongoing

OTTAWA – Canada’s job market took a leap toward recovery in July, adding 75,000 jobs, but economists say there’s still a long road ahead before the Bank of Canada considers tightening policy.

Statistics Canada said on Friday the unemployment rate fell to its lowest level in two years to 6.4 per cent.

Economists in a Reuters poll ahead of the release predicted a modest 15,000-job gain.

July’s job growth was split between full- and part-time work, with Ontario adding 52,000 jobs.

Statistics Canada said the country is now up 181,000 jobs since April, and 196,000 from a year ago.

“It’s stronger growth than we were maybe anticipating a few months ago,” said CIBC senior economist Andrew Grantham in an interview.

“It is consistent with what we’re seeing in terms of the GDP figures that the Canadian economy is recovering, even though we do see that there’s more slack in the economy to go and this recovery will need to continue before we really have to worry about Bank of Canada interest rate hikes.”

Statistics Canada said the unemployment rate is down half a percentage point from a year ago as more people who were looking for work had been successful at finding jobs than this time last year.

“The labour market is not yet strong,” RBC assistant chief economist Nathan Janzen said in a note to clients.

“The unemployment rate is still higher than normal, and wage growth slowed in July. But it has been improving despite still significant U.S. tariff uncertainty and higher energy prices.”

Average hourly wages were up 2.8 per cent in July year-over-year, though it decelerated from 3.3 per cent growth in June.

Much of July’s job gains were in the wholesale and retail trade sectors, which added 21,000 positions — though the sector is still down 50,000 jobs from a year ago.

Finance, insurance, real estate, rental and leasing added 18,000 jobs last month, while professional, scientific and technical services added 17,000.

The public administration sector shed 15,000 jobs last month, and the agricultural sector lost 9,600 jobs.

Desjardins managing director Royce Mendes said the labour market still has a long road to recovery.

“The latest jobs numbers add to the evidence that businesses are finding ways to navigate the current trade-related uncertainty,” Mendes said, adding a Bank of Canada interest rate hike isn’t likely to come until 2027.

“That said, even with the big gains seen in July, the labour market isn’t back to full health. As evidence of that, the annual pace of wage growth decelerated further … right around the rate of inflation.”

The Bank of Canada held its key policy rate steady at 2.25 per cent for the sixth straight time at its meeting in mid-July.

Financial market odds were about 96 per cent in favour of a hold from the central bank at its Sept. 2 meeting, according to LSEG Data & Analytics.

The unemployment rate among young people remained virtually unchanged in July at 12.6 per cent, Statistics Canada said, which is down 1.9 percentage points from a year ago.

“This is definitely a better summer than what we’ve seen in the last two years for young people trying to find jobs,” Grantham said.

This report by The Canadian Press was first published Aug. 7, 2026.