Canada's unemployment rate ticks down to 6.5%

Canada’s job growth slowed in June even though the unemployment rate ticked down 0.1 percentage points to 6.5 per cent following a surge of employment in May.

This is the second consecutive monthly decline, according to data from Statistics Canada on Friday, after a 0.3 percentage point decline in May.

On a year-over-year basis, the unemployment rate was down by 0.4 percentage points in June.

The economy added about 18,000 jobs in June, mostly driven by part-time work, which increased by about 17,500 jobs, or 0.5 per cent. Full-time employment was unchanged during this time period, Statistics Canada said.

The accommodation and food services sector gained the most jobs, adding 15,000 positions, or 1.2 per cent, in June, the third consecutive monthly increase. On an annualized basis, employment in this sector was up by 39,000 jobs, or 3.4 per cent.

Andrew Grantham, senior economist and executive director at CIBC Capital Markets, said the headline job numbers were higher than expected, but employment levels are still slightly lower than they were at the beginning of the year.

Gains in the accommodations and food services sector were also attributed to hiring blitzes for the FIFA World Cup, so any improvements in the second half of the year will be more gradual than seen in May and June, he said.

“The Canadian labour market continued to add jobs in June, putting the weakness seen over the first four months of the year further into the rear-view mirror,” he said in a note on Friday.

“For the Bank of Canada, the further slight improvement in the employment ratio is encouraging, but we suspect that policymakers will want to see further strengthening before seriously considering the need for higher interest rates, particularly if inflationary pressures remain less concerning than earlier in the year with oil and gasoline prices lower than their spring peaks.”

The manufacturing sector shed 17,000 positions in June, a 0.7 per cent decrease that offset an increase in May. Since January 2025, the sector has lost 61,000 jobs, or 3.2 per cent, as United States tariffs have taken a toll on the sector.

Canada’s public sector lost about 31,000 jobs, or 0.7 per cent, since May, but private-sector employment edged up by about 32,000 jobs, or 0.2 per cent.

Overall, job growth over the past 12 months has been concentrated in the private sector, which has added 94,000 positions year over year, an increase of 0.7 per cent.

Youth unemployment fell by 0.7 percentage points to 12.7 per cent in June, following a 0.9 percentage point decline in May. Statistics Canada attributed this to a more favourable student summer job market compared with 2025, as well as the uptick in part-time work.