Canada: Gradual improvement with tariff risks – RBC

Royal Bank of Canada’s (RBC) Nathan Janzen reports that Canada’s labour market strengthened in July, with a 75k employment gain following robust increases in May and June and a decline in the unemployment rate to 6.4%. Despite modest average job growth for 2026, improving conditions are occurring alongside slower population growth, elevated retirements, easing energy prices, and persistent but contained U.S. tariff risks.

Labour data firm but still modest

"Canada's labour market showed further signs of improvement in July with a 75k increase in employment building on 106k increases over May and June, and the unemployment rate ticking down to its lowest level (6.4%) in two years."

"That still leaves average monthly job growth for 2026 to-date at a historically modest 10k/month after a soft start to the year."

"The unemployment rate is a better measure of per-worker labour market conditions, and the tick lower in July left the rate down half a percent from a year ago."

"But it has been improving despite still significant U.S. tariff uncertainty and higher energy prices."

"We continue to look for the unemployment rate to edge lower over the second half of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)