Canada's labour market demonstrated notable improvement in July, with employment rising by 75,000 according to both Royal Bank of Canada (RBC) and National Bank of Canada (NBC) economists [1][2]. RBC's Nathan Janzen highlighted that this gain builds on robust increases of 106,000 jobs over May and June, bringing the unemployment rate down to 6.4%, its lowest level in two years [1]. NBC economists Matthieu Arseneau and Alexandra Ducharme reported a similar figure of 75.1K jobs added, alongside a 0.6% increase in hours worked and a strong private-sector hiring surge of 58K jobs in July. Over the past three months, private-sector employment has grown by 146K, marking a three-year high [2].
Both sources note that the unemployment rate has improved, with NBC emphasizing that it is now below the earlier range of 6.5%–7.0%, which had previously raised concerns [2]. RBC points out that average monthly job growth for 2026 to-date remains modest at 10K/month, following a soft start to the year, but the unemployment rate has edged lower by half a percent from a year ago [1]. Despite these improvements, RBC cautions that persistent U.S. tariff risks and higher energy prices remain significant, though their impact has been contained [1].
NBC analysts argue that while wage pressures are easing and excess labour supply persists, temporary factors such as census-related hiring and a tourism boom following the FIFA World Cup have artificially buoyed the labour market [2]. They advise that the Bank of Canada should not rush to raise interest rates, given these temporary supports and the contained risk of inflationary second-round effects from rising energy prices [2]. RBC similarly expects the unemployment rate to edge lower in the second half of the year, despite ongoing tariff uncertainty [1].
Market implications discussed include continued economic momentum, with NBC referencing GDP growth of around 3.0% in Q2 (official data pending August 28th), and a cautious approach to monetary policy due to the nature of recent labour market gains [2].
CONCLUSION
Canada's labour market posted strong job gains in July, with both RBC and NBC reporting improvements in employment and a lower unemployment rate. However, analysts caution that temporary factors and persistent risks mean the Bank of Canada should remain prudent on rate hikes. The market takeaway is one of cautious optimism, with continued improvement but lingering uncertainties.