What to know
- Canada’s unemployment rate fell to 6.5 per cent in June while the employment rate rose slightly to 60.8 per cent, with youth unemployment dropping to 12.7 per cent.
- More than one-third, or 34 per cent, of Ontario small businesses delayed hiring and nearly one in three reduced staff due to weak consumer demand, rising costs, and economic uncertainty.
- Four in five Ontario small business owners believe Canada is already in a recession or will enter one within the next year, with tariff uncertainty adding to their concerns.
- Canada added 18,000 jobs in June, but the manufacturing sector lost 17,000 positions as tariff pressures continued to weigh on the industry.
New data shows Canada’s labour market is slowly stabilizing following a period of higher unemployment rates and lower hiring from businesses. Although data in a different survey shows Ontario businesses are still holding back the reins when it comes to hiring.
A new Labour Force Survey by Statistic Canada shows numbers in June 2026 stayed relatively the same as the month before, with the employment rate only rising 0.1 per cent to 60.8 per cent and the unemployment rate dropping 0.1 per cent to 6.5 per cent.
Additionally, youth unemployment dropped by 0.7 per cent, landing on 12.7 per cent going into summer break.
Despite a majority of the data leaning toward the green, the reality of many Ontario small businesses aren’t reflected in the labour market numbers.
In a different survey by financial institution Merchant Growth, more than one-third or 34 per cent, of Ontario small businesses have delayed hiring any new employees, while almost one in three have cut back on staffing, with these decisions influenced due to an unpredictable market. Fifty-five per cent also cut spending as a whole to save money.
According to the Small Business Pulse 2026 data, almost half of business participants said weaker consumer demand was one of the biggest challenges they faced, with 45 per cent reporting they were feeling the decrease in purchases by the general public. The rising cost of fuel, higher utility bills, labour costs and/or minimum wage increases were also making some feel the pinch.
The financial institution found that four in five small business owners in the province think Canada is already in the middle of a recession, or will face one in the next year.
In a different Business Outlook Survey by the Bank of Canada, which looked at the second quarter of 2024, the number of businesses in the country budgeting for a recession to hit in the next 12 months jumped from nine per cent to 17 per cent.
Job increases
While jobs increased in June, the Statistics Canada survey suggests employment numbers didn’t change much.
The country saw an addition of 18,000 new jobs to the labour market, while private-sector employment rose by 32,000, or just 0.2 per cent.
Since the increase of tariff costs, the manufacturing industry lost 17,000 jobs during June, adding to a total of 61,000 jobs stripped away since January 2025.
Merchant Growth CEO Dave Gens stated in an email to Now Toronto that essential services will get back to functioning somewhat normally first.
“The sectors that were insulated from tariffs, essential services, and parts of healthcare and skilled trades, come back first,” he wrote.
He added that the blue-collar industries, retail, and hospitality will have a slower time getting back on their feet.
“The trade-exposed side, manufacturing, retail, and hospitality, takes longer, because their confidence is tied to demand and costs that are still moving.”
Ongoing tariff negotiations have contributed to the recession fears, with seven in 10 Ontario businesses having exposure to U.S. suppliers, customers, and partners, and 45 per cent worried about the outcome of Canada, the United States, and Mexico bargaining.
