Canada’s economy saw a boost in May with the addition of 88,000 jobs, surpassing expectations and offsetting earlier job losses in 2026. Nearly 80 per cent of the year’s job losses were reversed with this significant increase, the first since November. The unemployment rate dropped to 6.6 per cent in May from 6.9 per cent in the previous month, contrary to analysts’ forecasts of it remaining at the April level.
Statistics Canada reported that the job additions were primarily in full-time positions, with a net increase of 154,000 jobs, almost entirely recovering the losses in this category from the beginning of the year. Part-time employment, however, declined by 66,200 jobs. Over the past year, Canada has faced challenges due to U.S. trade issues that led to job cuts and hindered overall hiring.
Benjamin Reitzes, managing director of BMO Economics, described the job report as exceptionally positive, noting that while the employment numbers are up 0.7 per cent year over year, it is crucial to maintain a balanced perspective. The recent positive figures follow a period of GDP contraction, prompting discussions about a potential technical recession in Canada.
The construction industry led the job creation in May, adding 26,800 jobs, followed by gains in information, culture, recreation, transportation, and warehousing sectors. On the flip side, wholesale and retail trade saw a decline of 35,000 jobs. Youth unemployment also decreased to 13.4 per cent in May, reflecting a positive trend from the previous month.
Average hourly wages for permanent employees rose by 3.2 per cent in May, a decrease from the 4.8 per cent growth seen in April. Despite the positive job numbers, experts suggest that Canada’s labor market remains stable but subdued, with slow job growth expected to persist due to a stagnant population growth rate.
The latest job report precedes the upcoming Bank of Canada interest rate decision, with expectations that the interest rates will remain unchanged at 2.25 per cent. Overall, the job market remains steady, with a cautious outlook on future growth given the current economic conditions.
