Canada’s Unemployment Drops to 6.9%, Adds 83,000 New Jobs
In a surprising turn of events, Canada’s unemployment rate dipped to 6.9% in June 2025, defying expectations of a rise to 7.1%. This marks the first monthly improvement since January 2025, offering a glimmer of hope amid economic uncertainty.
The economy added a robust 83,000 new jobs, the strongest monthly gain since December 2024. This brought total employment to 22,613,700 people, signaling resilience in the labour market despite external pressures.
The employment rate edged up to 60.9%, a 0.1 percentage-point increase from May. Meanwhile, the participation rate rose slightly to 65.4%, reflecting more people joining or seeking work.
Job growth was largely driven by a surge in part-time employment, the sharpest in three years. Wholesale and retail trade sectors led the gains, while health care and social assistance also saw significant increases. However, agriculture experienced a slight decline.
Provincially, Alberta (+30,000), Quebec (+23,000), Ontario (+21,000), and Manitoba (+8,500) were the top performers. Conversely, Newfoundland and Labrador (-3,500) and Nova Scotia (-3,400) saw employment drop.
Employment among core-aged adults (25 to 54 years) rose sharply, with men (+62,000) and women (+29,000) both seeing gains. Youth and those aged 55 and older experienced little change.
Average hourly wages increased by 3.2% year-over-year to $36.01, while total hours worked rose by 0.5% in June and 1.6% compared to June 2024.
Despite these positive trends, long-term unemployment remains a concern. Over one in five unemployed Canadians (21.8%) have been searching for work for more than six months, a higher proportion than a year ago.
Economic Context and Outlook: A Cautious Optimism
The improvement in Canada’s labour market in June 2025 comes amid a backdrop of significant economic uncertainty, particularly due to ongoing trade tensions with the United States. The U.S. administration’s looming threat of new tariffs, scheduled to take effect on August 1, has cast a shadow over Canada’s economic outlook. Despite the robust job gains, economists caution that the risk of further trade disruptions and sector-specific weaknesses remains a critical concern.
Manufacturing, a sector heavily exposed to international trade, remains particularly vulnerable. While the negative effects of the trade war have not yet spilled over into the broader economy, experts warn that this could change if the situation escalates. The resilience of the labour market in June, however, suggests that the economy is holding firm against external pressures for now.
Long-term unemployment continues to be a stubborn issue, with 21.8% of unemployed Canadians searching for work for more than six months—a proportion higher than the previous year. This highlights the challenges of structural unemployment and the need for targeted policies to address skill mismatches and support displaced workers.
Looking ahead, the outlook for Canada’s labour market remains cautious. While the June data provides some optimism, the persistent threats of trade disruptions and elevated long-term unemployment serve as reminders of the fragility of the economic recovery. Policymakers and businesses will need to remain vigilant to navigate these challenges and sustain the momentum of job growth.
Conclusion
Canada’s labour market showed unexpected resilience in June 2025, with the unemployment rate dipping to 6.9% and the addition of 83,000 new jobs. This positive trend, driven by strong part-time employment and gains in key sectors like wholesale and retail trade, offers hope amid economic uncertainty. Provinces such as Alberta, Quebec, and Ontario led the employment growth, while others like Newfoundland and Labrador saw declines. Despite these improvements, challenges like long-term unemployment and external pressures, including U.S. trade tensions, cast a cautious outlook on sustained recovery.
Frequently Asked Questions (FAQs)
1. What caused Canada’s unemployment rate to drop to 6.9% in June 2025?
The unemployment rate decreased due to the addition of 83,000 new jobs, primarily in part-time roles, and an increase in the participation rate as more people sought employment.
2. Which sectors experienced the most significant job growth in June 2025?
Wholesale and retail trade, health care, and social assistance sectors saw notable job increases, while agriculture experienced a slight decline.
3. How did employment vary across Canadian provinces in June 2025?
Alberta, Quebec, Ontario, and Manitoba had significant job gains, whereas Newfoundland and Labrador, and Nova Scotia saw employment decreases.
4. What is the current situation regarding long-term unemployment in Canada?
Long-term unemployment remains a concern, with 21.8% of unemployed Canadians searching for work for over six months, a higher proportion than the previous year.
5. How might U.S. trade tensions impact Canada’s economic outlook?
Ongoing trade tensions, including potential new tariffs, pose risks to Canada’s economy, particularly affecting trade-exposed sectors like manufacturing, despite the current labour market resilience.
