Canada’s Labour Market Gains Momentum in July as Unemployment Falls to a Two-Year Low

July 2026 Labour Market Report

Statistics Canada’s July Labour Force Survey showed a stronger Canadian labour market, with employment increasing by 75,000 (+0.4%) and the unemployment rate falling 0.1 percentage points to 6.4% — its lowest level since July 2024. The employment rate also increased to 60.9%.

July’s results build on a broader improvement that has emerged over the past several months. Since April, employment has increased by 181,000 (+0.9%), driven primarily by an increase in full-time work, while the unemployment rate has fallen for three consecutive months.
For employers, the numbers suggest that Canada’s labour market is gaining some momentum. But the improvement is not occurring evenly. Hiring conditions continue to differ considerably across industries, regions and talent segments.

Looking Beyond the Headline: Canada’s Labour Market Is Showing Signs of Improvement

A gain of 75,000 jobs makes July noticeably stronger than June, when employment increased by just 18,000.

More important than any single month, however, is the direction of several indicators.

The unemployment rate has now declined by 0.5 percentage points since April to reach 6.4%, its lowest level in two years. The proportion of unemployed Canadians successfully finding work has also improved compared with last year.

In July, 20.8% of people who had been unemployed in June found work. That was higher than 18.5% during the same period in 2025, although it remained below the pre-pandemic average of 26.6% recorded between 2017 and 2019.

That distinction matters.

The labour market is improving, but it has not necessarily returned to the conditions employers or job seekers experienced before the pandemic. Employers should continue to look beyond the national unemployment rate and consider what is happening within the occupations, industries and regions where they compete for talent.

Want to better understand Canada’s monthly employment numbers? Read our guide, How to Read Canada’s Monthly Labour Market Report, to learn which indicators matter and what they can tell employers about the talent market.

Private-Sector Employment Continues to Drive Growth

The composition of July’s employment increase provides another encouraging signal.

Private-sector employment increased by 58,000 (+0.4%), while self-employment rose by 44,000 (+1.6%). At the same time, public-sector employment declined by 27,000 (-0.6%).

The trend is even clearer when looking back to April. Over that period, private-sector employment has increased by 146,000 (+1.1%), while the number of self-employed Canadians has risen by 73,000 (+2.7%).

For employers, continued private-sector growth suggests businesses are becoming more willing to add talent, even as organizations remain careful about costs and economic uncertainty.

It does not necessarily mean hiring conditions are easy. As demand increases in specific sectors, competition for experienced workers and specialized skills can strengthen quickly.

Core-Age Workers Lead July’s Employment Gains

Canadians aged 25 to 54 accounted for much of July’s employment growth, adding 51,000 jobs (+0.4%).

The gains were particularly strong among core-aged women, whose employment increased by 33,000 (+0.5%). Their unemployment rate fell 0.3 percentage points to 5.2%, while their employment rate increased to 81.2%. That employment rate was also higher than the pre-pandemic average of 79.1% recorded from 2017 to 2019.

Employment among core-aged men increased by 18,000 (+0.2%), while their unemployment rate was little changed at 5.8%.

For employers, strength among core-age workers is meaningful because this segment contains much of Canada’s experienced workforce.

A stronger employment market among experienced professionals can increase competition for workers with established technical knowledge, industry expertise and leadership capabilities — even when the overall unemployment rate remains above the levels seen during Canada’s tightest post-pandemic labour markets.

Wage Growth Moderates to 2.8%

Average hourly wages increased 2.8% year over year in July to $37.17, following growth of 3.3% in June.

The moderation is notable after several years in which employers faced significant compensation pressure.

But slower national wage growth does not mean compensation has stopped mattering.

Salary expectations and wage pressure can vary substantially by occupation, industry, seniority and geography. Employers recruiting engineers, technology specialists, skilled professionals or other difficult-to-find talent may experience compensation conditions that look very different from the national average.

For workforce planning, market-specific compensation data remains more useful than relying on a single national wage figure.

Youth Employment Is Improving, but Challenges Remain

Canada’s youth labour market has also improved in recent months.

The unemployment rate for Canadians aged 15 to 24 was 12.6% in July, little changed from June but well below its recent peak of 14.3% in April. It was also 1.9 percentage points lower than in July 2025.

However, youth unemployment remained above the pre-pandemic average of 10.8%.

Conditions also vary considerably within the youth population.

Among returning students aged 15 to 24, the unemployment rate was 15.1%, down from 17.5% a year earlier. For returning students aged 20 to 24 — those most likely to be attending post-secondary education — unemployment fell to 6.3%, its lowest July rate since 2018.

For employers, improving conditions for students and younger workers create an opportunity to think longer term about talent development.

Internships, co-op placements, graduate recruitment and structured entry-level opportunities can give organizations access to emerging talent while helping build the experience and skills they may need in the future.

Employment Grows Across Several Key Industries

July’s employment growth was spread across several industries important to Canada’s economy.

Wholesale and retail trade recorded the largest increase, adding 21,000 jobs (+0.7%). However, employment in the sector remained 50,000 (-1.7%) below its level a year earlier.

Employment also increased in:

• Finance, insurance, real estate, rental and leasing: +18,000 (+1.2%)
• Professional, scientific and technical services: +17,000 (+0.8%)
• Construction: +16,000 (+1.0%)

Public administration, meanwhile, lost 15,000 jobs (-1.2%), while agriculture declined by 9,600 (-4.3%).

For employers, these differences reinforce why national job growth should never be interpreted as a universal hiring trend.

Organizations operating in professional services or construction may see different candidate availability and hiring competition than employers in sectors where employment is declining.

Workforce decisions are most effective when they are based on the realities of the specific labour market surrounding the roles an organization needs to fill.

Regional Labour Markets Continue to Move at Different Speeds

July’s employment gains were also concentrated geographically.

Ontario added 52,000 jobs (+0.6%), its third employment increase in four months. The province has gained a net 119,000 jobs over that period, while its unemployment rate declined to 6.8% from a recent high of 7.9% in December 2025.

British Columbia added 18,000 jobs (+0.6%), while its unemployment rate fell to 6.2%.

Manitoba gained 5,900 jobs (+0.8%), and its unemployment rate declined to 5.0%.

Nova Scotia added 4,600 jobs (+0.9%) and has gained 12,000 jobs (+2.4%) over the past year.

Quebec’s employment was little changed, with an unemployment rate of 5.6%.

Alberta presents an especially interesting picture. Employment was little changed in July and the unemployment rate remained at 7.0%, but employment was up by 91,000 (+3.5%) compared with July 2025 — the largest proportional year-over-year employment increase of any province. Alberta’s unemployment rate was also 0.9 percentage points below its level a year earlier.

The major metropolitan areas also continued to diverge. Vancouver’s unemployment rate declined to 6.0%, Toronto’s was little changed at 6.7% but well below the 9.0% recorded a year earlier, while Montréal’s unemployment rate increased to 6.6%.

For employers recruiting nationally, these differences matter. The same position can face dramatically different candidate availability, competition and compensation expectations depending on where it is located.

What July’s Labour Market Means for Employers

July provides more evidence that Canada’s labour market is strengthening, but employers should keep three things in perspective.

1. Falling unemployment may gradually increase competition for talent.

The unemployment rate has declined for three consecutive months and more unemployed Canadians are finding work than they were a year ago. If that trend continues, organizations may have less room to delay hiring decisions for in-demand skills.

2. Private-sector momentum is worth watching.

Private-sector employment increased by 58,000 in July and has accounted for significant employment growth since April. Continued business hiring could make specialized talent markets more competitive even if national unemployment remains relatively elevated.

3. National improvement does not mean every talent market is improving at the same pace.

Employment conditions remain highly dependent on industry, occupation and location. Employers should continue to benchmark their hiring strategy against the specific workers they need rather than assuming national conditions reflect their own candidate market.

“July’s numbers are encouraging, but employers shouldn’t assume that a stronger labour market makes workforce planning simpler. As unemployment comes down and private-sector hiring grows, competition for specialized talent can return quickly. The organizations best positioned to hire are the ones that understand what is happening within their specific industry, geography and talent market — and are prepared to move when the right people become available.”
Marco Verna, President, Technology & Professional, Agilus by Synergie

The Bottom Line

July was one of the stronger months Canada’s labour market has seen recently.

Employment increased by 75,000. Unemployment fell to a two-year low. Private-sector hiring continued to grow. Core-age employment strengthened, youth labour market conditions improved and several major industries added workers.

At the same time, wage growth moderated, youth unemployment remained above pre-pandemic levels, and regional conditions continued to vary significantly.

For employers, July’s report may signal a gradual shift in the hiring environment.

The question is no longer simply whether Canada has enough job seekers. It is whether the people available have the skills, experience and location employers need — and how quickly competition for those workers could change as the labour market strengthens.

Want to see how Canada’s labour market is changing over time? Explore our Monthly Labour Market Snapshots to compare the latest employment, unemployment, wage and hiring trends across Canada.

Frequently Asked Questions

What was Canada’s unemployment rate in July 2026?

Canada’s unemployment rate was 6.4% in July 2026, down 0.1 percentage points from June. It was the third consecutive monthly decline and the lowest unemployment rate recorded since July 2024.

How many jobs did Canada add in July 2026?

Employment increased by 75,000 (+0.4%) in July. Since April, employment has risen by 181,000 (+0.9%), with the increase driven primarily by full-time employment.

Did wages increase in Canada in July 2026?

Yes. Average hourly wages among employees increased 2.8% year over year to $37.17 in July, following growth of 3.3% in June.

Which industries gained jobs in July 2026?

Employment increased in wholesale and retail trade (+21,000), finance, insurance, real estate, rental and leasing (+18,000), professional, scientific and technical services (+17,000), and construction (+16,000). Employment declined in public administration (-15,000) and agriculture (-9,600).

What does the July 2026 labour market mean for Canadian employers?

July’s data points to an improving Canadian labour market, with stronger employment growth, declining unemployment and continued private-sector hiring. However, talent availability continues to vary by industry, occupation and region. Employers should evaluate national trends alongside the conditions affecting the specific skills and markets in which they recruit.

How Agilus by Synergie Helps Employers

Agilus by Synergie helps employers turn labour market insight into practical workforce decisions. With specialized expertise across Engineering & Technical, Technology, Professional, Operational Staffing and Life Sciences, we help organizations understand talent availability, navigate changing hiring conditions and connect with the people they need to move their business forward.

Whether you are planning for future workforce needs, struggling to find specialized skills or responding to changing market conditions, our recruitment experts can help you build a hiring strategy grounded in the realities of your talent market.

Talk to an Agilus Recruitment Expert.