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Economic News

Canada: Job Gains Persist in June Amid Trade Tensions

July 11, 2025
LJ Valencia, Economist

Highlights

  • Total Canadian employment rose to an all-time high in June 2025, adding 83k jobs (0.4% m/m), surprising economic forecasters who didn’t anticipate a change in the month. As a result, the unemployment rate moved down a tick to 6.9%.
  • Total hours worked were up at 0.5% month-over-month in June, following similar growth in May, and were up 1.2% compared to the previous year. Average hourly wage growth increased 3.5% y/y in June. Table 1 summarizes the key data points.
  • At between -0.5% and 0% annualized in Q2, our tracking for real GDP growth is within the Bank of Canada’s range of forecasts from the April Monetary Policy Report, albeit subject to downside risk.

Comments

June saw a solid job gain of 83k despite waning business confidence from trade tensions and softening demand in goods-producing sectors. Employment in private services led the move, particularly in wholesale and retail trade. There were some modest gains in health care and social assistance, a significant change since December 2024. Even manufacturing employment also managed to post a slight advance.  Ontario jobs rose in the month despite the continued auto layoffs and declining production. Still, Windsor’s unemployment rate climbed to 11.2%, the highest among Canada’s largest cities.

In addition, job increases were concentrated in prime aged workers (ages 25 to 54 years) and the unemployment rate for that cohort fell by two ticks in June to 5.8%. Youth unemployment (ages 15 to 24 years) didn’t change but remained elevated even as the summer job market began (graph 1). The unemployment rate among returning students was 17.4%, up from 15.8% in the same month last year. This marks the highest student unemployment rate for June since 2009, excluding the pandemic years. Labour market conditions remained weak, with one in four prime-aged job searchers experiencing at least six months of unemployment, although the layoff rate held steady on a year-over-year basis (graph 2).

Average wage growth continued to soften, holding at 3.2% year-over-year in June, down from a peak of over 5% though most of 2024 (graph 3). Wage growth is expected to remain subdued throughout 2025 as labour demand weakens and headline CPI inflation should settle around the Bank of Canada’s 2% target.

Implications

Looking ahead, Canada remains stuck in trade war limbo—gaining temporary relief through CUSMA exemptions on 'Liberation Day,' yet now facing increased tariffs on aluminum and steel as of June 4 and possible 35% tariffs at the start of August. Furthermore, the recent headlines on federal budget savings targets suggest that we will likely see further reductions in public sector employment. Overall, while today’s report is seemingly encouraging, there are reasons to doubt that this pace can be sustained, especially considering other recent economic indicators, which have been much softer. Next week’s CPI release will likely play a bigger role on the Bank of Canada’s July 30th decision. Our call remains for a cut.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.