Canada's unemployment rate edged down to seven per cent in July, with just 200 new jobs created, according to Statistics Canada.

That's better than the 7.1 per cent recorded in June, but mainly reflects a decline in the number of people looking for work.  

This was a heightened problem for people over age 55, who saw employment continue to fall.

"If you look at the overall story, self-employment is rising," Benjamin Tal, deputy chief economist of CIBC World Markets Inc., told CBC News.  "So clearly, the quality of jobs is going down, down, down."

However, there were brighter prospects for youth aged 15 to 24, with 17,000 new jobs going to that segment. That didn’t budge the 13.2 per cent unemployment rate for young workers.

Much of the work created in July was in education, or in information, culture and recreation, with construction and health-care jobs in decline.

Tal called it a "structural problem."

"If you go to Alberta, there are a lot of jobs but not enough people to fill them yet it's the opposite in Ontario," he pointed out. "We need to close the gap between the jobs we need and the jobs we have [and] that's an issue of education and immigration policy."

On an annual basis, employment increased by 115,000 jobs, with most of the work part time and no increase in total hours worked compared with July 2013.

Analysts had predicted 20,000 jobs would be created in July.

"It's not a disaster," said Tal. "It's simply not improving at the rates we had seen before."

However, BMO economist Benjamin Reitzes expressed disappointment with the weak job picture, with just 0.7 per cent growth in the past year.

"While GDP growth appears to have picked up around mid-year, we’ve yet to see any benefits on the employment side. Soft job growth and modest wage gains will keep the Bank of Canada singing a dovish tune," he said, indicating that interest rates will remain low for some time.

Saskatchewan saw its lowest unemployment rate since data was first recorded in 1976 – 3.3 per cent. There was an increase of 6,800 jobs in Newfoundland and Labrador, following three months of declines, but the unemployment rate there remains at 11.9 per cent. 

There are 1.3 million unemployed Canadians, evidence of an economy that has run out of steam after churning out strong job gains in the first few years following the 2008-09 recession.

The  Bank of Canada said last month it believes it will take about two years to eliminate the slack in the economy.

In the meantime, there are more discouraged workers, with the July participation rate falling to 65.9 per cent, the lowest since 2001.

"All in all, today's employment release was very discouraging, as the economy continued to shed full-time jobs and unemployed Canadians in the thousands decided to stop looking for work," TD economist Randell Bartlett said in a note to investors.

"This follows a string of lacklustre employment reports for Canada, sending a clear signal that the labour market is stalling, in spite of the Canadian economy expanding in each of the first five months of 2014. Meanwhile, job gains south of the border continue to roar ahead," he wrote.

Corrections

  • An earlier version of this story gave incorrect job-creation numbers for July. There were 200 jobs created in the month.
    Aug 08, 2014 10:33 AM ET