'What business wants more than anything is exactly that: stability'
Youth unemployment in Canada has fallen for three consecutive months, and economists say the primary driver is fading anxiety over the U.S. trade war, which is giving employers enough confidence to resume hiring young workers.
Statistics Canada data show the unemployment rate for Canadians aged 15 to 24 dropped to 12.6% in July, down from 14.6% a year earlier. The unemployment rate for returning students, those who attend school full-time but work over the summer, fell to 15.1% from 17.5% over the same period.
"Youth unemployment is kind of like the canary in the coal mine for the labour market when the labour market weakens," Jim Stanford, an economist and director of the Centre for Future Work, told CTV News. He said young workers are typically the first to lose jobs when hiring slows and the last to be rehired.
Canada's labour market is expected to add 5,000 jobs in July while the unemployment rate holds at 6.5%, according to a recent RBC Economics forecast.
Employers adjusting to tariff uncertainty
Tim Lang, president of Youth Employment Services, told CTV News that businesses appear to have grown accustomed to prolonged trade instability rather than waiting for it to resolve.
"Now, a year later, the sense we're getting from the many businesses that we speak to, the thousands of them, is that they're kind of getting used to that noise," Lang said.
Stepan Arman, senior director at Indeed Canada, told CTV News that steadier conditions, rather than a resolution of trade tensions, are what employers have been seeking.
"What business wants more than anything is exactly that: stability. Boring at times is good for business," Arman said.
Lang added that improved macroeconomic indicators are reinforcing employer confidence, noting the Bank of Canada has cut its policy rate to 2.25% and second-quarter GDP growth rebounded to an annualized 3.4%.
What’s causing youth unemployment?
A study published by the Fraser Institute earlier this year links Canadian government policies to a sharp rise in youth unemployment, warning the situation could have lasting consequences for an entire generation of workers.
The commentary, written by Fraser Institute senior fellow Philip Cross, found that 437,000 Canadians aged 15 to 24 were unemployed in 2025 – a 57% increase from 290,000 in 2022.
The youth unemployment rate climbed from 10.0% to 13.8% over the same period.
“We’ve never seen their labour market situation deteriorate so rapidly and diverge so markedly from what adults are experiencing,” Cross wrote, describing the conditions as a “crisis” that could leave lasting scars on young workers.
Meanwhile, in a column published earlier this year, former British Prime Minister Rishi Sunak made a frank admission: he allowed the minimum wage to keep rising beyond what productivity justified and now believes it contributed to Britain’s highest youth unemployment in a decade.
