Why July’s labour numbers may not move the needle for Canada’s central bank
Canada’s latest employment figures show a drop of 40,800 jobs in July, but Scotiabank Economics says the numbers are unlikely to push the Bank of Canada (BoC) toward a September interest rate cut.
In an analysis published last week, Scotiabank vice president and head of capital markets economics Derek Holt described the July report as a “summer jobs report that masked underlying resilience.” He noted that the loss follows an 83,000-job surge in June, leaving a net gain of 103,000 positions so far in 2025.
“This is one of two job reports before the next BoC decision on September 17,” Holt wrote. He noted that “nothing hangs on just this one report,” pointing to the upcoming release of other key indicators such as inflation and GDP, as well as trade and fiscal policy developments.
The July downturn was driven largely by seasonal factors. Youths aged 15–24 accounted for 34,000 of the job losses, reflecting a softer summer job market and the impact of wildfires on seasonal work. Adults aged 25 and older saw a net decline of 7,000 positions after strong gains in June.
Full-time employment fell by 51,000, while part-time jobs rose by 10,300. The losses were concentrated in the private sector (-39,000), with public payrolls up 4,000 and self-employment down 6,000.
Both goods-producing and services sectors posted declines, with construction (-22,000) and agriculture (-11,000) leading the drop in goods, and information, culture and recreation (-29,000), health care and social assistance (-17,000), and business, building and other support services (-19,000) driving losses in services.
Despite the overall job decline, wage growth accelerated sharply, rising 8.1% month over month on a seasonally adjusted and annualized basis – the strongest gain since October 2024. Hours worked fell 0.2% from June but are tracking a modest 0.5% quarterly increase for Q3 so far.
The unemployment rate held steady at 6.9% as the labour force contracted by 33,000, pushing the participation rate down to 65.2%. Holt noted that the labour force remains volatile, with recent months seeing significant swings.
Provincially, Alberta, British Columbia and Quebec each saw job losses between 15,000 and 17,000.
Market reaction to the release was muted, with only about 10 basis points of easing priced in for September. “It’s probably because of these points that market moves were minor following the release,” Holt said, reiterating that the data alone will not sway BoC policy.
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