Canadian Job Growth Slows Sharply as Immigration Targets Fall

(CANADA) Canadian job growth cooled in July 2025 as the economy lost roughly 41,000 jobs, the steepest monthly fall since early 2022. The unemployment rate held at 6.9% because fewer people were looking for work. The setback comes as the federal government shifts immigration levels lower under a new 2025–2027 plan, trimming permanent resident targets from 485,000 in 2024 to 395,000 in 2025, with further reductions set for 2026 and 2027. Together, the softer hiring and smaller inflows point to a tighter labour market through the rest of the year.

Labour market snapshot: July slump after a brief rebound

Statistics Canada reported a choppy first half of 2025. After adding 44,500 jobs in Q1, hiring accelerated with 99,300 gains in Q2, driven largely by a strong June increase of 83,100 positions.

That momentum faded in July, when employment fell by about 40,800 to 41,000 jobs. Losses were widespread across sectors, although transportation and warehousing posted a modest gain.

Despite the headline drop, the unemployment rate stayed at 6.9% because the labour force shrank — a sign some job seekers paused their search.

Immigration levels plan: slower intake through 2027

The government’s new approach lowers permanent resident admissions to:

• 395,000 in 2025
• 380,000 in 2026
• 365,000 in 2027

Officials say this pace will ease pressure on housing, health care, and local services while keeping economic and humanitarian goals in focus. The shift follows several years of rapid growth, capped by a 2024 target of 485,000.

According to analysis by VisaVerge.com, the plan also signals a reset in how newcomers arrive and settle, with a larger share expected to transition from inside the country to permanent status.

Policy design: in-Canada transitions and tighter temporary streams

IRCC expects over 40% of 2025 permanent residents to be people already in Canada, often students or workers moving to permanent status.

Key policy changes and dates:
– New rules in effect since January 21, 2025 narrow who can get an open work permit as a spouse. Eligibility is mainly for spouses of students in approved programs or workers in high-demand jobs.
– For temporary residents, Ottawa introduced the first-ever targets and a 10% cut to international student admissions.
– Post‑Graduation Work Permit (PGWP) rules were tightened.

These changes reduce new arrivals and push employers to look more to talent already in Canada.

Sector pressures tied to the July numbers

July’s sector job changes included:

• Construction: -22,000
• Information, culture and recreation: -29,000
• Business support services: -19,000
• Health care: -17,000
• Transportation and warehousing: +26,000

Economists note the drop centered on full-time private sector roles and fewer hours worked, both signs of cooling demand.

Contributing pressures:
– Trade frictions and tariffs on steel, aluminum, and lumber have weighed on construction.
– Housing affordability makes it harder to attract workers to high-cost regions.

With immigration levels lower, these sectors may struggle more to replace retirements or ramp up for projects as conditions improve.

Wages, inflation, and the rate backdrop

• Average hourly wages rose 3.3% year over year in July.
• Inflation was near the Bank of Canada’s 2% target, at 1.9% in June.

Pay growth is still outpacing prices. The Bank left rates unchanged in April and June 2025, citing a soft economy and trade uncertainty. If hiring and hours keep slipping, rate cuts may return to debate — but any move will depend on growth and core inflation.

Employer playbook in a smaller talent pool

Employers should plan for tighter recruiting conditions as fewer newcomers arrive. Competition for skills will intensify, especially in health care and the trades.

Actions companies can take now:
1. Focus on retention and upskilling for current staff and temporary residents.
2. Offer mentoring and paid training that builds job-ready skills.
3. Build partnerships with colleges to align training with hard-to-fill roles and provide internships for rapid workplace experience.

Guidance for applicants: forms, status, and timing

For workers already in Canada, keeping status current is essential as employers lean more on in-country talent.

Common application routes:
– Those extending or changing work conditions from inside Canada generally use IMM 5710 (Application to Change Conditions, Extend my Stay or Remain in Canada as a Worker). The official page is here: https://www.canada.ca/en/immigration-refugees-citizenship/services/application/application-forms-guides/application-change-conditions-extend-your-stay-remain-canada-worker.html
– Applicants outside Canada usually file IMM 1295 (Application for Work Permit Made Outside of Canada): https://www.canada.ca/en/immigration-refugees-citizenship/services/application/application-forms-guides/apply-work-permit-outside-canada.html

Read instructions carefully and check processing times regularly.

How the slowdown and lower intake meet in daily life

For many families, fewer new arrivals mean longer waits to reunite with relatives abroad. Workers on study or work permits may see more provincial programs aimed at helping them stay.

For employers, the link between July’s job losses and tighter immigration is already visible:
– As projects pause and budgets thin, replacing staff grows harder.
– The mix adds stress to planning but also creates opportunities to hire more youth (who face elevated jobless rates) and to convert high-performing temporary residents into long-term hires.

Key takeaway: the combination of a July jobs drop and lower immigration targets tightens the labour market and shifts pressures onto employers and local training systems.

Official reference and where to track updates

IRCC posts the federal Immigration Levels Plan. The 2025–2027 framework, including targets for permanent and temporary residents, is here: https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/immigration-levels.html.

Statistics Canada’s Labour Force Survey showed the July drop of around 41,000 jobs and the steady 6.9% rate. The Bank of Canada left rates unchanged in April and June 2025, citing trade risks and a soft economy.

What to watch next for Canadian job growth

Key indicators to monitor:
– Whether hiring stabilizes in August and September
– If hours worked continue to decline
– How quickly employers fill open roles in health care and the skilled trades
– Whether the labour force keeps shrinking while immigration stays lower — which could keep wage growth elevated even if hiring is flat

For newcomers: keep permits valid, stay in touch with employers, and watch provincial pathways closely. Together, these signals will show if July’s 41,000 jobs loss was a short dip or the start of a longer slowdown.