What Is the Unemployment Rate in Canada?

What Is the Unemployment Rate in Canada?

The unemployment rate in Canada serves as a key economic indicator, reflecting the health and performance of the nation’s labor market. It represents the percentage of the labor force that is actively seeking employment but currently without work. This metric provides insights into economic growth or contraction and influences policy decisions.

Understanding How Unemployment is Measured

Statistics Canada, the country’s national statistical agency, measures unemployment primarily through its monthly Labour Force Survey (LFS). This household survey collects data from approximately 56,000 representative households across all provinces and territories. The LFS categorizes the working-age population into three mutually exclusive groups: employed, unemployed, and not in the labor force.

An individual is considered “employed” if they performed any paid work during the survey’s reference week, either as an employee or in self-employment, or if they did unpaid family work. “Unemployed” persons are those who were available for work during the reference week, were without work, and had looked for work in the past four weeks, were on temporary layoff, or were waiting for a new job to start. Individuals “not in the labor force” include those who are neither employed nor unemployed, such as discouraged workers, students, or retirees. The unemployment rate is then calculated by dividing the number of unemployed people by the total labor force and expressing it as a percentage.

Canada’s Latest Unemployment Figures and Recent Trends

As of July 2025, Canada’s national unemployment rate stood at 6.9%, reflecting a continued trend of increasing unemployment over the past year. The rate climbed from 5.9% to 6.8%. In May 2025, the rate had reached 7.0%, marking its highest level in nearly four years, excluding the period immediately following the onset of the COVID-19 pandemic.

This upward trajectory indicates a loosening of the labor market, with fewer available positions and increasing competition among job seekers. While there have been minor fluctuations, the overall pattern since early 2023 points to a rise in joblessness. Individuals are facing greater difficulties in securing employment compared to previous periods.

Key Factors Affects Unemployment in Canada

Several economic and societal factors influence Canada’s unemployment rate. Overall economic growth, measured by Gross Domestic Product (GDP), has a direct impact, as stronger economic activity leads to increased job creation. Conversely, a slowdown in economic expansion can result in fewer employment opportunities.

Interest rates also play a significant role; when the Bank of Canada raises interest rates, borrowing becomes more expensive for both consumers and businesses. This can reduce consumer spending and business investment, thereby slowing job growth and potentially leading to job losses, particularly in interest-rate-sensitive sectors like construction or real estate. Global economic conditions and trade dynamics, including geopolitical uncertainties or international tariffs, can create headwinds for Canadian industries, affecting export sectors and employment levels. Industry-specific trends, technological advancements, and automation can reshape the labor market, leading to job displacement in some sectors while creating new opportunities in others. Demographic shifts, including an aging population and immigration rates, also influence unemployment by altering the composition and size of the labor supply relative to demand.

Variations in Unemployment Across Canada

The unemployment rate in Canada varies by province and major region. For example, in July 2025, provincial rates ranged from a low of 4.3% in Saskatchewan to a high of 9.6% in Newfoundland and Labrador. These regional disparities often reflect differences in economic structures, industry concentrations, and local labor market conditions.

Beyond geography, unemployment rates also differ among various demographic groups. Youth experience higher unemployment rates compared to older age groups. In July 2025, the youth unemployment rate was 14.6%, which was more than double the national average and the highest since 2010, excluding pandemic-related spikes. Racialized groups and Indigenous Peoples often face disproportionately higher unemployment rates, highlighting persistent labor market inequalities. Educational attainment also influences employment prospects, with individuals with higher education experiencing lower unemployment rates.