Posthaste: The job market in Canada’s economic engine is sputtering

Toronto, which employs about a fifth of the nation's workforce, now has one of the highest unemployment rates in the country. Photo by Postmedia

Article content

Article content

Article content

Article content

Canada’s largest city accounted for about 20 per cent of the nation’s gross domestic product in 2021, and Ontario contributes roughly 40 per cent of federal government revenues, of which Toronto supplies a big portion, according to a report by TD Economics.

Article content

Yet this city that employs a fifth of the nation’s workforce now has one of the highest unemployment rates in the country — as it is battered by headwinds from multiple directions.

Article content

Article content

The jobless rate in Toronto has soared in recent years from a low of 5.6 per cent in 2023 to nearly 9 per cent as of September of this year, its highest level since 2012, outside of the pandemic, said TD economist Rishi Sondhi and analyst Tarek Attia.

Article content

Article content

It now has the fourth highest unemployment rate in the 41 major census metropolitan areas in Statistics Canada’s labour force survey. Only Windsor, on the front lines of the U.S. trade war, and Brantford, where the labour force has swelled, have higher rates in Ontario, said the report.

Article content

Another troubling statistic: roughly one in five young people, aged 15-24, in the city are unemployed.

Article content

Attia and Sondhi said up until recently population growth explained the climb in Toronto’s jobless rate. Since the end of 2023, the city’s labour force has grown by 4.5 per cent, far exceeding the rest of Ontario — and the jobs available.

Article content

“However, in 2025, a sharp slowdown in hiring momentum has been a more pronounced driver, reflecting idiosyncratic factors, a weak homebuilding industry and the trade war,” they said.

Article content

Battered by Donald Trump’s tariffs, the region’s industries dependent on U.S. trade are seeing even steeper job declines than the rest of the province.

Article content

Article content

Jobs in transportation/warehousing are down 6 per cent, and down 2 per cent in manufacturing.

Article content

Article content

“The scars of the trade war are evident …,” said the report. “Along with the competitiveness impacts from the tariffs themselves, the Canada-U.S. trade war has damaged business confidence, depressing hiring activity in manufacturing.”

Article content

But that’s not all Toronto has had to deal with.

Article content

With one of the most expensive housing markets in the country, the city has a bigger share of heavily indebted households vulnerable to the wave of mortgage renewals now rolling over at sharply higher rates.

Article content

Retail spending in Toronto is “significantly” slower than in the rest of Ontario as homeowners tighten their belts to cope with higher mortgage payments.

Article content

Job growth in discretionary services, culture and recreation has been softer than across the province.

Article content

Meanwhile, another of the city’s major employers has fallen on hard times.

Article content

Falling demand, an investor exodus and high costs have left the condo construction sector reeling, with cancelled projects hitting a record high and pre-construction sales plunging to levels not seen since the global financial crisis.