Flowork Insights: Labour Market in Canada, Q2 2025

AI
In the second quarter of 2025, the Canadian labour market recorded strong employment growth, yet the unemployment rate also increased, signalling a rising labour supply. Slowing investment momentum and declining productivity are creating new structural challenges, particularly in manufacturing and construction. For companies, this means the need to implement flexible recruitment strategies and tap into additional sources of talent.
Table of contents
Employment stabilization amid rising labour supply
According to Statistics Canada, supported by analysis from Reuters, the second quarter of 2025 brought a notable strengthening of employment. Compared to the first quarter, the number of jobs increased by 99.3k, with June alone delivering an impressive 83.1k new positions – the strongest monthly increase since the beginning of the year.
At the same time, the unemployment rate rose from 6.6% to 6.9%, indicating that the labour supply is expanding faster than the creation of new jobs. This signals that the Canadian labour market is entering a stabilization phase, where balancing supply and demand is becoming increasingly difficult.
Fewer vacancies and rising cost pressure
The structure of job vacancies shows a decline in hiring momentum. The job vacancy rate fell in May to 2.7%, compared to 2.9% in March and well below the pre-pandemic level of 3.4%.
The greatest recruitment challenges remain in manufacturing and construction, where rising labour costs add further strain to operating models. These sectors in particular feel the shortage of available specialists, making it harder to deliver projects and putting pressure on operating margins.
Macroeconomic outlook: balance under pressure
Macroeconomic indicators present a mixed picture of the economy. In the second quarter, GDP contracted by 1.6% year-on-year, driven mainly by weaker exports and subdued business investment. Private consumption and government spending provided partial support to offset the downturn.
At the same time, labour productivity fell by 1.0%, while unit labour costs rose by 0.5%. Nominal wages increased by 3.3% year-on-year, and with inflation at 1.9%, household real incomes remained relatively stable.
Implications for business and HR
For Canadian companies, the current environment highlights the need for more flexible workforce strategies. Despite the drop in vacancies, skills shortages remain a significant issue, especially in key sectors of the economy.
Employers should consider:
- using flexible forms of employment to respond quickly to economic changes,
- developing training and reskilling programs to better align employee skills with market needs,
- broadening the talent pool by hiring international specialists, who can complement the domestic workforce.
Flowork as a partner for business in Canada
At Flowork, we support Canadian enterprises in adapting to the evolving labour market. Our strength lies in providing access to vetted candidates, including professionals from Ukraine, who serve as a strategic complement to the domestic talent base.
We combine labour market intelligence with recruitment expertise to deliver solutions that increase organizational flexibility and support long-term business growth.
Share

Natalia Roszkowiak
Marketing Project Manager
Similar posts







































