08:56 AM EDT, 08/08/2025 (MT Newswires) -- The Canadian labor market came back down to earth with a "bump" in July, as a 41,000 decline in jobs -- while the consensus

was for 10,000 gain -- offset roughly half of the surprise gain seen in the prior month, said CIBC after Friday's release of the Labour Force Survey (LFS).

Job quality was "weak," as all of the decline was driven by full-time work (-51,000), which contributed to a 0.2% decline in total hours worked, noted the bank.

The sector breakdown showed declines were strongest in information & recreation and construction, while some trade-sensitive areas such as transportation and manufacturing actually saw job gains. By age, young people (15-24) continued to face a tough labor market and saw a decline in seasonally adjusted employment over the month.

The overall unemployment rate held steady at 6.9%, although only because of a two-tick decline in participation, stated CIBC. Hourly wage growth for permanent employees accelerated to 3.5%, from 3.2%, but remains well below levels seen a year ago.

There's still more than a month to go until the Bank of Canada's next interest rate decision, and as such a lot more data to be released between now and then, including another employment report, two inflation releases and quarterly gross domestic product, added CIBC.

However, Friday's weaker-than-expected employment figure is nevertheless supportive of the bank's call for a 25bps interest rate reduction at that September policy meeting.