Canada's jobless rate remained steady at 8.6 per cent in July, even as the country lost about 45,000 jobs, Statistics Canada said Friday.

The unemployment rate remained unchanged from June as people gave up looking for work and dropped out of the labour market.

Economists had been forecasting the country would lose between 20,000 and 30,000 jobs for the month and that the unemployment rate would bump up to 8.8 per cent.

Self-employment continued to rise last month, adding 35,000 jobs. Since October, self-employment has gone up by 70,000.

Employment fell by 22,000 in accommodation and food services in July, while retail and wholesale trade was up by 24,000. Construction sector employment decreased by 18,000 in July, bringing total losses since October to 120,000, while employment in manufacturing was little changed. Since October 2008, manufacturing employment has dropped by 218,000, or 11.1 per cent.

While most of July's employment losses were in Quebec, there were also losses in Saskatchewan, as well as in Newfoundland and Labrador. Employment was little changed in all other provinces.

Quebec lost 37,000 jobs in July, bringing total losses in province since October to 68,000. The provincial unemployment rate last month was nine per cent, the highest since January 2004.

Saskatchewan lost 5,000 jobs as the jobless rate there increased to 4.7 per cent.

After seeing job gains in June, Newfoundland and Labrador lost 2,800 jobs in July. That drove the province's jobless rate up 1.5 percentage points, to 17.1 per cent.

Unemployment rate may climb for a time

Since the peak in October 2008, employment across the country has dropped 414,000, predominantly among youths, with 205,000 lost, and men aged 25 to 54, with 201,000 jobs disappearing.

Economists pointed out that the jobs market will most likely remain weak, even though signs are pointing toward economic recovery now.

"Even though the Canadian economy is likely to resume positive growth sometime in the third quarter, we are likely to continue to see the unemployment rate climb for up to six months after the recession has come to a close," said TD Bank economist Diana Petramala.

"No one said it was going to be a smooth recovery, and especially not for employment," said BMO Capital Markets economist Douglas Porter.

"If there is any positive spin here for the broader economy, it’s that the job losses were almost entirely concentrated among summer students (though try telling your teenager that’s good news). Still, the underlying picture still looks quite soft, and there’s little sign here that the economy is quickly turning the corner," he wrote in a commentary.

Porter did add that some aspects of the economy are improving, including home sales, auto sales and overall financial conditions.

Tough market for students

The summer job market for full-time students age 15 to 24 continued to be very weak. July's unemployment rate for students climbed to 20.9 per cent — the highest July unemployment rate on record since comparable data became available in 1977.

The student jobless rate last month was 7.1 percentage points above what it was in July 2008.

"Students who have been unable to find work this summer will be forced to take on more debt and may be unable to afford to return to school this fall," said Katherine Giroux-Bougard, the national chairperson of the Canadian Federation of Students. "Summer jobs are not a luxury; they pay the bills."