TORONTO - On a busy Sunday morning at Gears bike shop in Toronto, the familiar sounds of clinking and whirring fill the store - accompanied by the chatter of customers speaking to the shop’s half-a-dozen employees about bikes and parts.
The store is accustomed to having plenty of young seasonal staff -- but the last few years, you’d be hard-pressed to find any youth roaming the store in uniform.
“We’ve needed to shift our focus and support our full-time workers, allowing them to keep their positions year-round and so we’ve been hiring less youth,” said Ira Kargel, partner at Gears bike shop, to CTV News on Sunday. “We’re hoping to see that shift and change, but this year in particular, we may have hired four youth versus 10 or 12 in the last few years.”
Economists have pointed to a myriad of factors as to why businesses like Gears have been straying away from hiring youth, including the economic uncertainty that comes with the U.S. trade war and its tariffs, inflation and the increasing cost of living, and a surging labour supply from non-permanent residents and experienced workers creating increased competition.
“Youth unemployment is kind of like the canary in the coal mine for the labour market when the labour market weakens,” said Jim Stanford, an economist and the director for the Centre for Future Work, on Sunday. “Youth unemployment goes up much faster than overall unemployment and that’s because young people are typically the last ones hired and the first ones fired, so they always have a harder time finding new work as they enter the labour market or if they’re looking for a job over summer.”
How U.S. trade wars affect hiring
But for three straight months, new Statistics Canada data show youth unemployment numbers decreasing and according to experts, it’s because the initial shock of the U.S. trade war appears to be wearing off.
“Now, a year later, the sense we’re getting from the many businesses that we speak to, the thousands of them, is that they’re kind of getting used to that noise (from the U.S.),” said Tim Lang, president of Youth Employment Services.
“I think they also actually appreciate that sort of measured and statesmanlike leadership from Prime Minister (Mark) Carney and then even the fiery and more ‘captain Canada’ stance from (Ontario) Premier (Doug) Ford, or Premier Wab Kinew, or Premier (David) Eby out of B.C.,” added Lang. “That’s given them a little bit more confidence because when they look at their data, and their own revenues, they also see that things are going okay and I think that’s what’s driven some of the optimism that we’re seeing.”
Statistics Canada’s jobs report for July indicated that youth unemployment has dropped significantly since last summer, with the unemployment rate for Canadians ages 15 to 24 now at 12.6 per cent compared to 14.6 per cent in July of 2025.
The unemployment rate for returning students, (Canadians within the same age range who attend school full-time between fall and spring but work during the summer), has dropped from 17.5 per cent in July of 2025, to 15.1 per cent in July 2026.
Economists say employers were likely waiting to see whether the economy would fall off a cliff, with predictions made earlier this year that Canada may go into a recession. But instead, it remained steady with interest cuts finally working their way through the economy after the Bank of Canada reduced its policy rate to 2.25 per cent.
Now companies are feeling more confident in hiring young workers.
“We have had some degree of calm, particularly on the tariff front,” said Stepan Arman, senior director at Indeed Canada. “What business wants more than anything is exactly that: stability. Boring at times is good for business.”
Summer hiring picking back up
The summer hiring season has also improved significantly, according to job experts with more youth being hired in restaurants, retail and summer tourism - sectors traditionally known for hiring teens and those in their early-20s.
“I think we can point to some positivity within the economy that benefits young workers, especially in the summer,” said DT Cochrane a senior economist with the Canadian Labour.
“We know that more Canadians are travelling within Canada and that creates more demand for the kinds of accommodation and food service work that young people disproportionately do, especially in summer months.”
Although inflation still plays a factor, with Canadians paying substantially more for housing, groceries and other essentials than they did several years ago -- those prices have started leveling off.
Economists say that’s resulted in more consumer spending, allowing businesses to become ‘more bold’ with their hiring practices than they were last year.
“In fact, the latest GDP numbers have 0.3 per cent increase and annualized, that’s (a second-quarter growth rebound) of 3.4 per cent. That’s very strong,” said Lang.
A slow-down of Canada’s population growth may also be playing a role in more jobs opening up for youth, according to Indeed Canada’s Stepan Arman -- as the reduction of permits for international students and temporary foreign workers announced by Ottawa nearly two years might have made its way to the ground floor at many businesses.
“The employment market is always going to be a little bit of a lagging indicator after policy has come into play,” said Arman. “That being said, I think that we are beginning to see reduced inflows, somewhat increased outflows, from in terms of new arrivals in Canada.”
“Those entry level positions typically have been a bit more heavily weighted towards new Canadians and so if there’s less supply in that specific category, then perhaps we are seeing a little bit of an increase in terms of demand and that’s helping youth in Canada.”
Where will youth unemployment go from here?
There is optimism that the trend of youth unemployment and unemployment overall across Canada, could continue to decrease for the next few months and even possibly throughout 2026, although economists remain somewhat cautious.
“The overall unemployment rate among all Canadians seems to be sort of levelling off around the 6.7 per cent range,” said Cochrane.
“The youth unemployment rate, it’s always a little bit noisier. We’ll see it bounce around. My guess is that it’s going to be levelling off or somewhere around 13 per cent. We’ll have to assess coming out of the summer months because for youth, especially the summer and the non-summer months are fairly different stories.”
“There’s still a lot of question marks out there about Canada’s economy, mostly arising from the international environment,” added Stanford. “But there are some encouraging signs that growth is picking up and that the overall labour market is strengthening and that will certainly be reflected in continued job growth for young workers and a reduction in the youth unemployment rate, in the years ahead.”
At Sky Zone trampoline park in Toronto on a busy Sunday afternoon, dozens of children off on summer vacation can be found bouncing through play areas - speckled among the hyperactive children are young adults and teenage employees who feel ‘lucky’ to have landed a job.
“It was really hard to find,” said 17-year-old Abdulkadir Saeed, who was hired this past year at Sky Zone. “I was handing out applications left and right. I would describe it as tough.”
Saeed said most of his friends have had trouble finding a steady job, but that appears to be shifting.
“I have many friends that are unemployed and I see the unemployment crisis first-hand, there’s a lot of young people who are motivated to make sure they’re employed,” added Saeed.
“Some of (my friends) got hired this summer, which I’m happy for and I think there’s just four of my friends left to get employed.”
