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Economic News

Quebec: Sharp Decline in the Labour Force Participation Rate in July

August 8, 2025
Sonny Scarfone
Principal Economist

Highlights

  • In July, Quebec’s labour market recorded a net loss of 15,000 jobs, offsetting part of the 23,400 positions gained the previous month.
  • Despite the decline in employment, Quebec’s unemployment rate fell sharply, from 6.3% to 5.5%, returning to its level at the start of 2025. This drop is primarily attributable to a significant decrease in the labour force participation rate, which stood at 64.6%.
  • Job losses were concentrated in part-time positions, split almost evenly between the private sector and self-employment.
  • On a sectoral basis, construction and education posted notable gains, while healthcare and the information and culture sector recorded declines. The manufacturing sector, meanwhile, saw its fifth drop in six months, with 5,000 jobs lost in July, bringing the cumulative decline to 10,200 since the beginning of the year.
  • At the regional level, half of Quebec’s regions posted higher unemployment rates than a year ago. The increases were particularly pronounced in manufacturing-intensive or resource-rich areas, such as Saguenay–Lac-Saint-Jean (+1.4 percentage points), Abitibi-Témiscamingue (+1.2), and Mauricie (+1.1). That said, the unemployment rate in these regions remains relatively low, staying below 5%.

Comments

Despite the decline observed in July, Quebec’s labour market remains relatively resilient in a year marked by considerable volatility. Since January, net job creation has totalled 17,100. However, this growth has been driven by part-time positions, limiting the increase in hours worked, which are up just 0.8% on an annualized basis.

Even though we’re not seeing waves of layoffs, employers remain cautious. Following a period of labour shortages, they’re reluctant to reduce their workforce and are instead slowing down hiring. This climate of caution is particularly hindering young people’s entry into the labour market. In a note External link. published last week, we highlighted that, so far this summer, students aged 20 to 24 in Canada are facing the highest non-pandemic unemployment rate since the end of the early 1990s recession.

Similarly, Quebec’s labour market remains relatively strong for workers in their prime working years (25 to 54), with an unemployment rate hovering around 4%. However, conditions are much more challenging for young people, whose unemployment rate has consistently remained above 10% since the onset of the current economic turmoil (see graph 2).

Implications

Uncertainty persists regarding the future of trade relations with the United States in the absence of a new formal agreement. Until details surrounding the future trade framework are clarified, it will be difficult to restore business confidence and boost hiring.

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