Unemployment rate falls as youth add 33,000 jobs in Canada

A better start to the youth summer jobs market helped the economy record steady employment gains in June, Statistics Canada said Friday.

Employers added 18,000 jobs last month, the agency said, mostly in part-time and private sector work.

That pushed the unemployment rate down a tenth of a point to 6.5 per cent, back to where it stood in January.

Employment gains narrowly topped economists’ expectations heading into the release but mark a slowdown from the 88,000 jobs added in May.

Young workers have struggled in a tough labour market in recent years, but the group was a bright spot in the June jobs report.

StatCan said youth aged 15 to 24 added 33,000 jobs in June, mostly in part-time work. Workers aged 25 to 54 saw similar gains while older members of the labour market faced losses.

The unemployment rate for returning students – those planning to head back to school in the fall – was 15.3 per cent in June, 2.1 percentage points lower than the same month a year ago. This was still higher than the pre-pandemic average of 13 per cent.

The agency noted however that job prospects varied widely within this age group.

Returning students aged 20 to 24 saw an unemployment rate of 8.2 per cent in June, while those aged 17 to 19 faced a jobless rate of 16.5 per cent. Teens aged 15 or 16 recorded an unemployment rate of 30.6 per cent in June as they searched for work in the waning days of the school year.

The wholesale and retail trade industry and the food and accommodation sector – two areas that tend to employ a lot of youth – led job gains in June.

Numerous economists weighing in on Friday’s data release also pointed to the FIFA World Cup as driving up hospitality sector hiring in June.

Manufacturing, meanwhile, shed 17,000 positions last month. The industry is down some 61,000 jobs since a recent peak in January 2025 as U.S. tariffs continue to weigh on the sector, StatCan said.

TD Bank economist Maria Solovieva said in a note to clients Friday that manufacturing “remains a poster child of the uncertainty hanging over the Canadian economy.”

The June jobs report will be the Bank of Canada’s last major look at the state of the economy before making its next interest rate decision on Wednesday.

Solovieva said weakness in trade-exposed sectors of the labour market will help to offset inflationary pressures elsewhere in the economy, allowing the Bank of Canada to remain on hold next week.

As of Friday morning, financial market odds were more than 90 per cent in favour of an interest rate hold from the central bank next week, according to LSEG Data & Analytics.

All told, overall employment was up by 99,000 positions year-over-year in June with growth concentrated in the private sector.

Average hourly wages rose 3.3 per cent annually in June, up from three per cent in May.

“The labour market is still not strong — the unemployment rate is still higher than normal. But economic growth data has also shown signs of picking up in Q2 after stalling over the winter,” said RBC assistant chief economist Nathan Janzen in a note to clients.

Janzen noted that with population growth slowing, Canadians should get used to seeing smaller employment gains on a monthly basis.

But with the unemployment rate ticking lower, he said June’s labour force data support RBC’s view that the jobs market is improving on a per-worker basis. He said he expects the unemployment rate will continue to decline through 2026.

By Craig Lord