June Job Gains Offer Relief … For Now

In June, employment in Canada rose by 83,000 jobs (0.4 per cent). The labour force participation rate held steady at 65.4 per cent, while the unemployment rate declined slightly from 7 per cent to 6.9 per cent. On a year-over-year basis, average hourly wages grew by 3.2 per cent.

Key insights

The June Labour Force Survey brought some welcome news after four months of stagnation in the labour market. The U.S. administration’s 90-day pause on broad-based tariff threats has helped lift consumer confidence, which had been weighed down by uncertainty earlier this year. However, trade relations with the United States are expected to remain tense for the remainder of the year. Just yesterday, U.S. President Donald Trump announced a 35 per cent tariff on Canadian imports, effective August 1. While we believe these tariffs are unlikely to remain in place for long, if at all, they will continue to fuel economic uncertainty, ultimately hurting job creation over the coming months.

The labour market is also adjusting to the effects of new migration policies, which came into full effect in the first quarter of 2025. Canada’s population grew by just 20,100 residents during that period—a marginal increase compared to recent trends. In the immediate term, this is welcome news for job seekers, who are faced with a sluggish labour market.

That said, Canada’s emerging demographic trends are bad news for its labour market as a whole. We anticipate that business uncertainty will begin to ease next year as the U.S. approaches its midterm elections. As labour demand picks up, declining migration will increasingly constrain the supply of workers. Combined with a rising number of retirements, that will significantly limit labour force growth. The resulting imbalance between labour demand and supply is likely to tighten the labour market significantly, putting downward pressure on the unemployment rate and igniting labour shortages, similar to what was experienced during the pandemic.