TORONTO – A new report says the current youth unemployment rate is at levels typically only seen during recessions, even as other age groups face a more resilient labour market.
CIBC analyst Andrew Grantham says the rise in unemployment among those aged 15 to 24 has gone above and beyond what the current economic backdrop would suggest.
He says the youth jobless rate typically rises about four percentage points during periods of weakness, which is higher than the two percentage point gain among prime age workers when the economy pulls back.
But since 2022, the youth unemployment rate has risen more than average, with a 5.5 percentage point gain. That’s at the same time core-aged workers have seen a lower-than-usual rise in joblessness.
Grantham suspects the rise of artificial intelligence is a factor on the demand side, because the jobs typically undertaken by young people are also the ones most at risk from technological changes.
He says the jobless trend is also due in part to an uptick in non-permanent residents from 2022-24 adding to the labour force, but he notes that the higher supply of workers doesn’t account for weakness across the entire market.
“With population growth decelerating rapidly recently, in large part because of a curbing of student numbers, that supply factor is unlikely to explain the renewed weakening in youth employment witnessed this year,” Grantham wrote in his analysis published Tuesday.
Statistics Canada reported youth unemployment in July rose to 14.6 per cent, the highest rate since September 2010.
Grantham said early data points to the role of AI and other labour-substituting technologies that will likely disproportionately affect younger Canadians looking for jobs.
For example, the report suggested the retail sector is partly responsible for high unemployment, as retailers increasingly roll out self-checkouts, while business and support services are increasingly turning to AI.
But the factors contributing to the weakening job market aren’t going to last forever, Grantham said.
“Population growth, particularly among (non-permanent residents), is already slowing, meaning less incremental supply needing to be absorbed into the labour market,” he said.
Other periods of technical advancement that led to upheaval in the job market, including the rise of the personal computer and the internet, had those losses offset in the long term with new jobs in other areas, he said.
The report didn’t indicate how soon the trend might begin to shift.
This report by The Canadian Press was first published Aug. 26, 2025.
Companies in this story: (TSX: CM)
