Canada's economy shed over 40,000 jobs in July, partly offsetting earlier growth

The Canadian economy lost more than 40,000 jobs in July, sinking the share of people employed to an eight-month low, Statistics Canada reported on Friday, as the labour market gave back substantial gains seen in June.

The unemployment rate, however, remained steady but at a multi-year-high level of 6.9 per cent, the agency said.

The economy shed 40,800 jobs in July against a net addition of 83,000 jobs in June, taking the employment rate — or the percentage of people employed out of the total working-age population — to 60.7 per cent.

The employment rate was the lowest since the pandemic and the loss of jobs was concentrated among permanent employees, Statistics Canada said. 

Analysts were expecting the economy to add 13,500 jobs and that the unemployment rate would tick up to seven per cent, with BMO chief economist Douglas Porter saying that the final numbers show a weak start to the third quarter.

"This is an unambiguously weak report … although it comes hard on the heels of an unambiguously strong report," Porter wrote in a note to clients. "Taken together, the overall picture is a soft economy, running with some excess capacity, not surprising in light of the trade uncertainty."

The declines were largely driven by job losses among young people aged 15 to 24, a cohort that has struggled to find work in the current economic climate. Their employment rate dropped to 53.6 per cent, the lowest since November 1998, excluding the pandemic.

The youth unemployment rate, meanwhile, hit 14.6 per cent — the highest rate for this group since September 2010, again barring the pandemic years. High school students returning to class in the fall are having an especially difficult time finding work, according to the data agency.

The sectors hit hardest last month included the information, culture and recreation industry, which lost 29,000 jobs, while construction lost 22,000 jobs, and business, building and support services shed 19,000 jobs. Transportation and warehousing made gains with a 26,000-job bump.