Last month, Canads’s unemployment rate dropped for the first time January.Christinne Muschi/The Canadian Press
Canadian employers went on a hiring blitz to start the summer and the jobless rate unexpectedly dropped in June, despite challenges posed by the country’s trade war with the United States.
Statistics Canada’s Labour Force Survey for June showed that the economy added more than 83,000 jobs last month, with 70,000 of those positions concentrated in part-time work. The unemployment rate ticked down to 6.9 per cent from 7 per cent in May.
The results came as a surprise to economists, who were expecting no change in employment and the jobless rate rising to 7.1 per cent. This was the largest increase in employment in six months.
The gains came mainly from the wholesale and retail trade sectors, which added 34,000 jobs, as well as health care and social assistance, which generated 17,000 positions in June.
The manufacturing sector managed to add 10,000 jobs last month, though it has shed more than 26,000 positions on a year-over-year basis.
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Trade-dependent sectors such as manufacturing and transportation have been hard hit by layoffs over the past six months owing to the tariff war between Canada and the U.S. On Thursday evening, U.S. President Donald Trump threatened to impose a 35-per-cent tariff on Canadian imports as of Aug. 1, up from the 25-per-cent duty that already applies to some goods. Last month, Mr. Trump doubled tariffs on steel and aluminum to 50 per cent, and this week said he will slap a 50-per-cent tariff on copper imports on Aug. 1.
Over all, there were 1.6 million people unemployed in June, the Statscan data showed, up 9 per cent on a year-over-year basis. The youth unemployment rate – workers aged 15 to 24 – remained unchanged at 14.2 per cent.
Despite the trade volatility, investors see slim odds of the Bank of Canada lowering interest rates on July 30. Interest rate swaps, which capture market expectations of monetary policy, suggest there’s a 19-per-cent chance of a cut later this month, according to LSEG data on Friday morning. That was down from 26 per cent before the jobs report was released.
Royce Mendes, managing director and head of macro strategy at Desjardins Capital Markets, called the job numbers “solid” and increased his forecast for GDP growth in the second quarter of 2025.
“With the unemployment rate still elevated, today’s labour market data won’t be the swing factor for the upcoming Bank of Canada rate decision,” he noted, adding that next week’s inflation data will play a much more important role in determining if the bank will reduce rates.
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TD Bank’s senior economist Leslie Preston cautioned that despite the labour market bucking its weakening trend, Mr. Trump’s new tariff threats show that uncertainty persists for Canadian businesses. “We think a strong argument for further rate cuts remains in Canada; we’ll soon see if the BoC agrees,” she wrote in a Friday note.
Job losses could continue to bleed into sectors tied to resources and manufacturing if the trade war continues for years. A recent report from Ontario’s Financial Accountability Office suggested that the province could lose 68,100 jobs in 2025 because of tariffs, and that figure might increase to a total of 120,000 in 2026. The unemployment rate in Ontario stood at 7.8 per cent in June, unchanged from May.
Workers in Ontario’s automotive sector have been particularly affected by tariffs. Statscan data indicated that Windsor had an unemployment rate of 11.2 per cent in June, the highest among metropolitan areas in the country.
Last month, Unifor, the union representing more than 40,000 auto workers in Canada, said that it was worried for the future of several plants in Ontario, including Ford Motor Co. in Oakville and Stellantis NV in Brampton. Both are closed for retooling and most employees have been laid off, with no indication the plants will open back up in the near future.
Friday’s job report also showed that average hourly earnings rose by 3.2 per cent on a year-over-year basis in June, a decrease in wage growth from the previous month.