Canada’s labour market posted a stronger-than-expected performance in July, adding 75,000 jobs and pushing the national unemployment rate down to 6.4 per cent, its lowest level in two years, despite continued trade uncertainty with the United States.
Statistics Canada reported on Friday that employment gains were recorded across both full-time and part-time positions, with hiring spread across several sectors including finance, construction and professional services.
The increase far exceeded economists’ expectations of about 20,000 new jobs, highlighting the resilience of the Canadian economy as businesses adjust to ongoing US tariff policies.
The latest figures provide fresh evidence that businesses are gradually adapting to trade restrictions imposed by US President Donald Trump, easing concerns that tariff-related uncertainty could significantly weaken Canada’s labour market.
The employment report also contrasted sharply with developments south of the border, where the United States recorded a loss of 23,000 jobs in July.
Reacting to the figures, TD Bank said the labour market was showing “clear signs of recovery” and projected that unemployment would continue to decline through the rest of the year.
The bank, however, warned that risks remain following Trump’s renewed threat to impose 50 per cent tariffs on selected Canadian goods from August 19.
Prime Minister Mark Carney has said his government is working with Washington to prevent the proposed tariffs while negotiating revisions to the United States-Mexico-Canada Agreement (USMCA).
Although Trump has criticised the trade pact and called for changes, the agreement continues to allow most trade between Canada and the United States to remain tariff-free.
RBC also said the USMCA continues to provide important protection for Canadian exports but warned that any major disruption to bilateral free trade would have significant consequences for Canada’s economy.
The stronger employment figures are expected to strengthen confidence in Canada’s economic outlook and could support the Bank of Canada’s view that the economy remains resilient despite persistent external trade pressures.
