'The Canadian labour market was able to make it through a daunting first half of 2025 largely intact'
Canada’s unemployment rate increased in the second quarter of 2025, even as job vacancies fell, according to a new report from Indeed.
The unemployment rate rose from 6.7 per cent in March to 6.9 per cent in June, reflecting a continued but slower upward trend compared to last year.
At the same time, the job vacancy rate dropped to 2.7 per cent in May from 2.9 per cent in March, now sitting well below its pre-pandemic level of 3.4 per cent.
In his analysis, Brendon Bernard, senior economist at the Indeed Hiring Lab, found that the rise in unemployment was driven by slow hiring, not by a surge in layoffs. New hires made up just 1.9 per cent of employees in the second quarter, a figure 20 per cent below pre-pandemic averages.
Meanwhile, layoff rates remained low, with only 0.7 per cent of employees losing their jobs, similar to recent years and well below historical norms. Most industries saw lower hiring rates compared to 2017–2019, except for information, culture and recreation, forestry, and public administration.
The job vacancy rate has hit its lowest level in nearly a decade, according to a recent Statistics Canada (StatCan) report.
Meanwhile, employment started the second quarter of 2025 flat before a “surprisingly strong” June, according to the Indeed report.
Losses in trade-exposed industries such as manufacturing, transportation and warehousing, and natural resources were offset by gains in sectors like information, recreation, finance, and retail trade.
Meanwhile, growth of advertised wages and salaries in job postings has been steadily slowing, more closely resembling the gradual labour market cooling of recent years, noted Bernard.
The Indeed Wage Tracker rose at an average 2.7 per cent year-over-year pace in Q2 2025, down from 3.0 per cent in Q1 and well below its nearly 5 per cent peak in mid-2022. Posted wage growth is still a bit higher than its pre-pandemic level—unlike job postings themselves—but the downward trend highlights how overall job market dynamics have shifted in employers’ favour in recent years.
“The Canadian labour market was able to make it through a daunting first half of 2025 largely intact,” said Bernard.
“So far, the major vulnerability facing the employment situation—that the trade war and surrounding uncertainty would cause a jump in layoffs—has been confined to the most US-exposed sectors, limiting the recent rise in unemployment. Instead, slow hiring persists across the economy, leaving conditions challenging for job seekers across a range of circumstances. These trends are also filtering into wage growth, which is now on the wane, with the exception of public-sector related areas like healthcare.”
There is ample reason to question whether employment growth has really been as strong as suggested by recent data from the federal government, according to one Canadian economist.
