Canada’s labour market showed little sign of momentum in May, with unemployment rising to 7%, marking the highest rate since 2016 outside of the pandemic years, according to the latest data released Friday by Statistics Canada.
The national jobless rate has steadily climbed from 6.6% in January, reflecting mounting pressure on workers and employers alike amid economic uncertainty and global trade challenges. The modest gain of 8,800 jobs in May did little to improve the overall picture, with analysts describing the labour market as effectively “treading water.”
“There has been virtually no employment growth since January,” StatCan said, noting the stagnation follows a brief surge of 211,000 jobs added between October 2024 and January 2025.
While 58,000 full-time jobs were created last month, they were offset by a loss of 49,000 part-time positions. Gains were led by the wholesale and retail trade sector, which rebounded with 43,000 jobs after losses earlier in the spring. Other sectors with modest growth included information, culture, and recreation.
However, public administration shed 32,000 jobs, erasing April’s election-related boost. Manufacturing, already facing headwinds from a Canada-U.S. tariff dispute, lost over 12,000 jobs — with cities like Windsor, Oshawa, and Toronto bearing the brunt. The transportation, warehousing, and accommodation and food services sectors also posted job losses.
Compounding the concerns, the average duration of unemployment rose significantly, with Canadians out of work for an average of 21.8 weeks, up from 18.4 weeks a year earlier. Youth and student job-seekers were hit especially hard — 1 in 5 returning students aged 15 to 24 were unemployed in May, the worst May figure since 2009 outside the pandemic.
Wage growth remained steady, with average hourly wages rising 3.4% year-over-year, matching April’s pace.
Economists say the weakening labour data is increasing pressure on the Bank of Canada, which held interest rates steady this week. With its next rate decision set for July 30, several analysts now expect the central bank to resume rate cuts this summer.
“Slack is still growing in the labour market,” said BMO’s Doug Porter, warning that the rising unemployment rate is a “loud warning bell.” CIBC’s Andrew Grantham agreed, suggesting more softening ahead could tip the balance toward renewed monetary easing.
As global trade tensions and internal economic challenges persist, policymakers and job seekers alike are bracing for what could be a tough summer in Canada’s economy.