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RBC Expects Canada July Jobless Rate to Hold at 6.5%, Employment to Edge Higher

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Canada's July Labour Force Survey (LFS) is expected to confirm that the gradual improvement in employment conditions has continued, offering the first major jobs market update for the third quarter, according to RBC Economics in a note.

RBC forecasts employment to increase by 5,000 in July, with the jobless rate unchanged at 6.5%. While this would leave overall employment slightly lower in 2026, it would extend the gains seen in May and June.

Recent labor market indicators, including job postings, have been broadly unchanged heading into July, suggesting hiring demand has stabilized despite ongoing US trade uncertainty, wrote the bank in a Friday note.

The composition of job gains and wage trends will remain key to watch, added RBC. June's employment growth was led by part-time jobs, with a smaller rise in full-time employment. Wage growth recovered slightly after May's slowdown but is expected to ease further as labor market slack remains elevated.

A July LFS broadly in line with expectations would reinforce the view that Canada's labor market is stabilizing and that the economy remains on a path of modest, steady growth, said the bank.

Statistics Canada will publish the July LFS on Friday at 8:30 a.m. ET.

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