Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
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Canada added 18,000 jobs in June and the unemployment rate fell to 6.5%, but the real story is what happened to wages — and what it means for the Bank of Canada’s interest rate decision on Wednesday, July 15.
Statistics Canada’s June Labour Force Survey, released Friday morning, showed employment gains that narrowly topped the consensus estimate. Scotiabank’s forecast cited in our jobs report preview called for 10,000 new jobs with unemployment holding at 6.6%. The actual numbers came in better on both counts.
But buried in the headline figures is the data point that matters most to the Bank of Canada: average hourly wages rose 3.3% year-over-year, up from 3.0% in May. That acceleration reverses the recent trend and puts wage-driven inflation pressure back on the BoC’s radar just days before its July 15 rate decision.
June’s Job Gains: Modest But Positive
Employment rose by 18,000 in June, a 0.1% gain that brings total employment to just over 21 million Canadians. The employment rate ticked up 0.1 percentage points to 60.8%, while the participation rate held steady at 65.0%.
Under the surface, the composition was mixed. The private sector added 32,000 jobs — the growth engine of the economy — while the public sector shed 31,000 positions.
Youth employment (ages 15-24) surged by 33,000 jobs, driving the youth unemployment rate down 0.7 percentage points to 12.7%. Core-aged workers (25-54) added 33,000 positions as well. But workers aged 55 and older saw employment fall by 47,000, a 1.1% decline. The unemployment rate for this group rose to 5.2%.
By industry, accommodation and food services led gains with 15,000 new jobs, a 1.2% increase. Manufacturing shed 17,000 positions, a 0.9% decline. Agriculture and utilities also posted losses.
Provincially, Quebec added 14,000 jobs, with its unemployment rate at 5.4%. Ontario saw little change, with unemployment holding at 7.0%. Nova Scotia and Saskatchewan posted modest gains.
Wage Acceleration: The Inflation Wildcard
Average hourly wages hit $37.20 in June, up 3.3% from a year earlier. That’s an acceleration from May’s 3.0% pace — and it’s the figure that complicates the Bank of Canada’s policy calculus.
The BoC’s inflation target is 2%. Wage growth running at 3.3% can keep upward pressure on service-sector inflation, making it harder for the central bank to declare victory on price stability. Rising wages aren’t inherently bad — they support consumer spending and household income — but they can extend the period of elevated inflation if wage growth consistently outpaces productivity gains.
We know from the BoC’s Business Outlook Survey released earlier this week that recession fears among Canadian businesses are rising. But wage pressures suggest inflation risks haven’t fully subsided. That puts the BoC in a bind: slow growth argues for rate cuts to support the economy, but persistent wage inflation argues for holding rates to keep price pressures in check.
What It Means for the Bank of Canada’s July 15 Decision
This is the last major economic data release before the Bank of Canada’s interest rate decision on Wednesday, July 15.
If wages had remained at May’s 3.0% pace or decelerated further, the BoC would have more room to ease. At 3.3% and rising, the risk of cutting too soon — and reigniting inflation — becomes harder to dismiss. Our view: a rate hold is now the baseline scenario for July 15.
That doesn’t mean cuts are off the table entirely. Additional data ahead of the BoC’s subsequent decisions later this year could shift the picture. But for now, higher-for-longer appears to be the path of least risk for the central bank.
The TSX regained the 35,000 level Friday, closing at 35,305.31, up 104.86 points or 0.30%. Financials led the gains, with RBC up 1%, TD up 0.7%, and BMO up 1.1%. Rate-sensitive sectors like banks benefit from sustained net interest margins when rates hold steady.
What Canadian Investors Should Watch
If the BoC holds rates on July 15, Canadian investors should prepare for a higher-for-longer rate environment through at least the third quarter. That has implications across asset classes.
Rate-sensitive sectors like REITs and utilities face continued headwinds when borrowing costs remain elevated. But Canadian bank stocks benefit from stable or higher rates, which support lending margins. GICs also stay more competitive with dividend yields for longer when rates hold.
For dividend stocks, a rate hold means the yield competition from fixed income persists. Dividend investors need a growth thesis alongside yield — not just current income but the expectation that dividends will rise over time.
If you’re weighing where to hold these investments, our comparison of Canada’s best investing apps breaks down the options. Diversification remains the best positioning in this environment. This single data point doesn’t justify a major portfolio rotation, but it confirms that rate volatility and inflation risks haven’t disappeared.
Ready to position your portfolio for the current rate environment? Open a Questrade account today and get $50 in free trades. TFSA and RRSP accounts let you shelter dividend income and capital gains from tax regardless of where rates move next.
The Bottom Line
June’s labour force data shows a Canadian economy in transition. Job gains were modest but positive, unemployment ticked down, and the gains were concentrated among younger and core-aged workers while older workers lost ground. But wage growth re-accelerated to 3.3% — and that’s the figure that matters most for monetary policy.
The Bank of Canada’s mandate centres on keeping inflation at its 2% target. June’s report shows a resilient labour market but persistent risk on the inflation side of that equation. When the BoC announces its decision Wednesday, that wage figure will be front and center.
For Canadian investors, the implication is clear: expect rates to stay higher for longer. Position accordingly.
Data as of July 10, 2026. Source: Statistics Canada Labour Force Survey.
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Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
