Canada’s unemployment rate has declined steadily through 2026, reaching 6.4% in July—its lowest level in two years—after peaking at 6.9% in April and averaging near 6.6% for the year to date. This trajectory follows a period of labor-market softening that pushed the rate to 7% in mid-2025, a level last seen in 2016. With the Bank of Canada holding its policy rate at 2.25% and noting improving growth and easing inflation pressures, employment gains have outpaced labor-force expansion, supporting the market-implied 92.3% probability that 2026 will not produce the highest unemployment reading since 2016. Realistic upside risks to the rate include renewed trade disruptions or a sharper slowdown in energy prices that could stall hiring, though current data and central-bank guidance indicate these outcomes remain low-probability over the balance of the year.