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

Few can deny

Toronto is an economic force

in this country.

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

.

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.

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.

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.

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

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.

“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.

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.

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

“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.”

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

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.

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

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

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

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.

“While the trade war has weighed on hiring in Toronto this year, construction hiring has been a multi-year sore spot,” said the report.

Employment in this sector is well off its 2023 peak, and TD sees the weakness continuing for at least another year.

Canadians get a fresh look at the job market tomorrow when Statistics Canada releases data for October.

TD expects the jobless rates in Toronto and Ontario to slip lower as population growth slows further in the coming year, but they will still remain above average as the trade war and the housing slump continue to weigh on the economy.

Introducing FP West: Energy Insider, a new subscriber-exclusive newsletter from the Financial Post Western Bureau. Get behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning. Sign up now. 

 Sign up here to get Posthaste delivered straight to your inbox.

Toronto housing market hasn’t looked this bad in October in 25 years.

Data from the Toronto Regional Real Estate Board Wednesday showed

sales were down 9.5 per cent

year over year and at their lowest level year to date since 2000.

National Bank of Canada economist Alexandra Ducharme said the number of transactions has been essentially stagnant since July, with a “significant deterioration in the labour market” cancelling out any boost from

Bank of Canada

interest rate cuts.

“Looking ahead, the potential for recovery is probably going to be limited by the Bank of Canada suggesting that its easing cycle is over for now, as well as by ongoing affordability challenges in the region,” she said.

• Earnings: BCE Inc., Bombardier Inc., Lightspeed Commerce Inc., TC Energy Corp., TransAlta Corp., Canadian Tire Corp. Ltd., Quebecor Inc., Saputo Inc., Pembina Pipeline Corp., Altus Group Ltd.

• What did the 2025 budget deliver for generation Z and millennial Canadians?
• Howard Levitt: Forget merit — good looks will still get you ahead every time
• Couple wants to retire abroad in their 40s. Do their RRSPs, TFSAs and other investments add up to enough?

If you’ve been holding off on buying that luxury boat or airplane, your wait is over, as the luxury tax is being repealed on boats and airplanes as of Nov. 5.

Cancellation of this tax is just one of the measures in Prime Minister Mark Carney’s first budget Tuesday. Tax expert Jamie Golombek fills us in on the tax changes that may impact you, as well as one highly-anticipated measure that was not in the budget.

Find out more 

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column

can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

mortgage rate page

for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s

YouTube channel

for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at 

posthaste@postmedia.com

.

• How the ‘clawback trap’ is shaving up to 75 cents off every extra dollar some Canadians earn
• Cracks are appearing around the edges of Canada’s credit world

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here