Canada’s Labour Market in August 2026: Employment Declines as Wage Growth Slows

Canada’s labour market saw employment decline in August, while the employment rate edged lower and the unemployment rate remained unchanged. According to Statistics Canada’s August 2026 Labour Force Survey (LFS), employment fell by 42,000, or 0.2%, while the employment rate decreased 0.1 percentage points to 60.8%. The unemployment rate remained at 6.4%.

At the same time, average hourly wages increased 2.0% year over year to $37.02, although wage growth continued to decelerate for the second consecutive month.

Unemployment Rate Remains at 6.4%

The unemployment rate was unchanged at 6.4% in August, following three consecutive monthly declines from May through July, which totalled 0.5 percentage points.

Among the 1.5 million people who were unemployed in August, 24.0% were in long-term unemployment, meaning they had been continuously searching for work for 27 weeks or more.

The participation rate, which measures the proportion of people aged 15 and older who were employed or looking for work, fell 0.1 percentage points to 65.0% in August. On a year-over-year basis, the participation rate was little changed.

Employment Rate Falls to 60.8%

Employment fell by 42,000, or 0.2%, in August. This followed a cumulative increase of 181,000, or 0.9%, from April to July. Despite the monthly decline, employment was up 217,000, or 1.0%, compared with August 2025.

The employment rate fell 0.1 percentage points to 60.8%, which was on par with the rate recorded at the start of the year and 0.3 percentage points higher than in August 2025.

Public sector employment declined by 20,000, or 0.4%, in August, marking the third consecutive monthly decrease. Since May, public sector employment has declined by 78,000, or 1.7%. Private sector employment was little changed during the month, while self-employment was also little changed compared with July.

Employment Declines Among Youth and Core-Aged Workers

Employment among youth aged 15 to 24 declined by 19,000, or 0.7%, in August. The youth employment rate was little changed at 55.1% and remained 1.2 percentage points higher than a year earlier.

The youth unemployment rate edged up 0.3 percentage points to 12.9%. Despite the monthly increase, it was 1.4 percentage points lower than in August 2025.

Employment among people aged 25 to 54, or core-aged workers, declined by 16,000, or 0.1%.

The unemployment rate increased among core-aged men by 0.2 percentage points to 6.0%. For core-aged women, the unemployment rate fell 0.2 percentage points to 5.0%.

Among people aged 55 and older, the unemployment rate was little changed at 5.1%, while employment held steady. The employment rate for people aged 55 to 64 was 64.3%, also little changed both during the month and on a year-over-year basis.

Returning Students See Lower Unemployment

The August Labour Force Survey also provides insight into the summer job market for returning students.

From May to August, the LFS collects labour market information from students who attended school full time in March and intended to return to school full time in the fall.

In August, the unemployment rate for returning students aged 15 to 24 was 15.6%, down 1.3 percentage points from August 2025. On average from May to August 2026, the unemployment rate for returning students was 15.9%, compared with 17.9% during the same period in 2025.

Employment Trends Across Industries

Employment declined across several industries in August.

Business, building and other support services recorded a decline of 20,000 jobs, or 2.8%. Employment also declined in public administration by 8,800, or 0.7%; natural resources by 7,700, or 2.3%; and utilities by 5,600, or 3.5%.

Manufacturing was the only sector to record a significant increase in employment in August, rising by 22,000, or 1.2%. Most of this increase occurred in Ontario.

Over the 12 months to August, employment growth was concentrated in health care and social assistance, which increased by 129,000, or 4.5%; information, culture and recreation, which increased by 49,000, or 5.9%; and transportation and warehousing, which increased by 47,000, or 4.4%.

On the other hand, wholesale and retail trade recorded the largest employment decline across industries over the 12-month period, falling by 55,000, or 1.8%.

Average Hourly Wages Increase 2.0%

Average hourly wages among employees increased 2.0% year over year in August, reaching $37.02. This followed year-over-year growth of 2.8% in July and 3.3% in June.

The increase in average hourly wages was slower among employees with lower wages. For employees in the bottom 25% of the wage distribution, average hourly wages increased 1.1% to $18.66. For employees in the second-lowest 25%, wages increased 1.3% to $26.61.

Wages increased 2.1% for employees in both the third and top quartiles.

Employment Trends Across Canada

Employment trends varied across provinces in August.

Employment declined in Quebec by 19,000, or 0.4%, and edged down in Ontario by 18,000, or 0.2%. Quebec was the only province to record a year-over-year decline in employment, down 54,000, or 1.2%.

In contrast, employment increased in New Brunswick by 2,400, or 0.6%, while employment was little changed in the other provinces.

Statistics Canada also reported changes across other provinces. Employment declined by 0.4% in Prince Edward Island, while Nova Scotia recorded a 0.5% increase. Employment increased 0.6% in Newfoundland and Labrador, while British Columbia recorded a 0.2% decline.

At the census metropolitan area level, the decline in Quebec was concentrated in the Montréal CMA, where employment decreased by 21,000, or 0.9%. The unemployment rate in Montréal was 6.5% in August.

In Toronto, the unemployment rate was 6.7%, unchanged from July and down from a recent high of 9.0% in July 2025.

U.S. Tariffs and the Canadian Labour Market

The August LFS also provides context on the labour market for industries dependent on U.S. demand for exports.

Statistics Canada noted that these industries continued to face an uncertain economic context, compounded by the recent imposition of new U.S. tariffs on Canadian exports.

The layoff rate was 0.8% in August, slightly below the 1.0% recorded 12 months earlier. Over the 12 months to August, the average layoff rate was 0.9% for workers in industries dependent on U.S. demand for exports, compared with 0.7% for other industries.

What the August Labour Force Survey Shows

The August 2026 Labour Force Survey shows a Canadian labour market where employment declined following several months of growth.

Employment fell by 42,000 in August, while the employment rate declined to 60.8%. The unemployment rate remained at 6.4%, and the participation rate decreased slightly to 65.0%.

Employment declines were recorded among youth and core-aged workers, while employment among people aged 55 and older remained steady. At the industry level, employment declined in business, building and other support services, public administration, natural resources and utilities, while manufacturing recorded significant employment growth.

Over the 12 months to August, employment growth was concentrated in health care and social assistance, information, culture and recreation, and transportation and warehousing. Wholesale and retail trade recorded the largest employment decline over the same period.

Average hourly wages continued to increase, rising 2.0% year over year to $37.02, although the pace of wage growth continued to slow.

For employers and professionals monitoring the Canadian labour market, the August LFS provides data on employment, unemployment, wages, industries, demographics and regional labour market trends.

Explore More Canadian Employment Data

For a broader look at employment trends, explore Adecco Canada's Monthly Jobs Report, where Adecco Canada provides ongoing analysis of Statistics Canada's Labour Force Survey.

[Explore Adecco Canada’s Monthly Jobs Report]

 

Source: August Labour Force Survey, Stat Can