Economists warn Bank of Canada may be misreading labour weakness as vacancies drop to 2017 levels
Job vacancies in Canada have dropped to their lowest level in nearly eight years, while the unemployment rate continues to climb—especially among young workers—intensifying concerns about the direction of the labour market.
According to Statistics Canada’s Payroll Employment, Earnings and Hours report released July 31, job vacancies fell by 20,400 (–4.1 percent) in May 2025 to 478,200. This marks the lowest vacancy total since October 2017.
The drop follows a 3.4 percent decrease in April and represents a 15.8 percent year-over-year decline.
Over the same 12-month period, the unemployment-to-job vacancy ratio rose to 3.3—the highest level since January 2017 outside the pandemic years—due to a 13.8 percent increase in unemployed persons and a sharp drop in job postings.
As reported by the Fraser Institute, the youth unemployment rate reached 14.2 percent in June 2025, up from 13.5 percent the year before.
Among students aged 15–24 returning to school in the fall, the rate hit 17.4 percent—its highest June level since 2009, excluding pandemic years.
The youth employment rate also dropped to 54.3 percent, below the 2017–2019 average of 58.4 percent.
The Fraser Institute warned that young Canadians missing out on early job experience could face “prolonged scarring effects” that reduce their long-term earnings and job readiness.
It also pointed to the rising number of temporary foreign workers and provincial minimum wage increases as potential barriers to youth employment.
Despite these signs of weakness, Statistics Canada reported a small gain in payroll employment, which rose by 15,300 jobs (+0.1 percent) in May 2025.
However, CIBC senior economist Andrew Grantham argued the labour market may not be as healthy as it appears.
In his comments reported by the Financial Post, Grantham said, “actual employment growth over the past year may have been much slower than advertised,” adding that the view Canada’s labour market is only weak in trade-sensitive sectors “is too simplistic and likely incorrect.”
Grantham noted that while Canada’s unemployment rate has risen from 6.6 percent to 6.9 percent this year, only 20 percent of the decline in manufacturing employment appears to have affected the unemployment rate directly.
He added that the Bank of Canada could be misreading labour conditions by relying on Labour Force Survey data, and suggested the “stall” in the Survey of Employment, Payrolls and Hours points to broader softness.
Meanwhile, employer caution has filtered into worker sentiment.
According to Global News, a Robert Half survey found that just 26 percent of workers plan to search for new jobs in the second half of 2025, down from 38 percent earlier in the year.
Cal Jungwirth, director at Robert Half, said businesses are holding back on hiring due to economic uncertainty.
“If you’re an organization and you don’t have clarity on what your business is going to look like tomorrow or next month or next quarter,” he said, “you’re not going to be risking adding any type of cost into the businesses.”
Brendon Bernard, senior economist at Indeed, also told Global News that hiring has slowed as companies anticipate reduced turnover and prepare for fewer departures.
“It’s a difficult market for job seekers,” Bernard said, calling the trend part of a “relatively pessimistic environment” for Canadian employers.
