Canada’s labour market topped expectations in June amid a surprise surge in hiring.
Statistics Canada said Friday that the unemployment rate dropped a tenth of a percentage point to 6.9 per cent in June as the economy added some 83,000 jobs.
The vast majority of those jobs were part-time, the agency said, with 47,000 positions added in the private sector.
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A Reuters poll of economists heading into Friday’s release had expected the jobless rate would rise to 7.1 per cent in June as employment levels held flat.
The June figures buck the recent slowdown in the labour market. Last month was the first significant job gain since January and snapped a streak of three consecutive months where the unemployment rate rose.
The wholesale and retail trade industry led growth with 34,000 new positions, followed by healthcare and social assistance with 17,000 jobs added. Only the agriculture sector faced notable job losses with 6,000 positions shed, StatCan said, while other industries saw little change.
Even the manufacturing sector, which has faced job losses in recent months amid Canada’s tariff dispute with the United States, saw a gain of 10,000 positions in June.
Tariff pressures are continuing to bite in trade-heavy markets like Windsor, Ont., which StatCan noted has the highest unemployment rate of all census metropolitan areas at 11.2 per cent. Alberta, Manitoba, Ontario and Quebec all posted job growth in June.
The unemployment rate for returning students – those heading back to school in the fall – remained elevated at 17.4 per cent in June. That’s up from 15.8 per cent in the same month last year but down slightly from 20.1 per cent in May, which marked the start of the summer jobs season.
TD Bank senior economist Leslie Preston said in a note to clients Friday that one month of job gains doesn't change the fact that the labour market is much cooler than it was a year ago.
U.S. President Donald Trump's threat on Thursday to impose 35 per cent tariffs on Canadian goods starting Aug. 1 also reflects the fraught landscape for businesses, Preston said.
The Bank of Canada will be parsing the labour figures closely as it prepares for its next interest rate decision on July 30.
CIBC senior economist Katherine Judge said in a note Friday that while the unemployment rate remains elevated, "the strength in other measures in this report clearly diminishes the odds" of the Bank of Canada cutting its policy rate this month.
After the jobs report Friday morning, financial markets were pricing odds of just 16 per cent for a quarter-point rate cut at the central bank's July decision, according to LSEG Data & Analytics.
The Bank of Canada has kept its benchmark interest rate on hold at 2.75 per cent in two consecutive decisions as it awaits more clarity on how the trade disruption will affect the economy.
Preston said TD Bank still sees room for more interest rate cuts but argued that next week's June inflation report from StatCan will have a bigger say in whether the central bank returns to cuts or not.
Benjamin Reitzes, BMO's managing director of Canadian rates and macro strategist, said in a note that while he is "skeptical" of the strong report given the uncertainty hanging over the economy, the June jobs figures were "pretty decent overall."
He said he expects the Bank of Canada will remain on the sidelines at its next decision, barring a sharp decline in underlying inflation next week.
This report by The Canadian Press was first published July 11, 2025.
