Labor markets show divergent trends in Canada and the United States

Labor market data for July 2026 shows diverging trends between Canada and the United States.

In Canada, employment increased by 75,000 in July, building on gains in May and June. This growth brought the unemployment rate down to 6.4%, its lowest level in two years. While year-to-date job growth remains modest at an average of 10,000 per month, the gains are notable given slower population growth and rising retirements. Manufacturing and construction were key drivers of this expansion.

Conversely, the United States labor market lost momentum in July, with nonfarm payrolls falling by 23,000. Although the unemployment rate edged lower to 4.1%, this was attributed to a shrinking labor force rather than increased hiring. Wage growth in the U.S. also moderated, with the year-over-year increase slowing to 3.2%.

The construction sector in the U.S. acted as a notable exception to the broader decline, adding 22,000 jobs in July, primarily driven by nonresidential construction.