Canada’s labour market staged its sharpest reversal in six months in May, adding 88,000 jobs when economists had pencilled in roughly 10,000. The unemployment rate fell 0.3 percentage points to 6.6%, its lowest reading since April.
The report lands two days before the Bank of Canada’s rate decision on June 10.
The gain was the first meaningful employment increase since November 2025. Before May, the economy had shed a net 112,000 jobs across the first four months of the year. The employment rate climbed 0.2 percentage points to 60.7%, also snapping a months-long slide. Total employment now stands at 21,122,000 Canadians.
Full-time work drove almost the entire reversal. Full time positions surged by 154,000, or 0.9%, in May, nearly erasing the cumulative loss of 156,000 full-time jobs recorded from January through April. Part-time employment moved the other way, falling 66,000, or 1.7%.
Private sector payrolls accounted for 56,000 of the overall gain.
Construction led all sectors, adding 27,000 positions, or 1.7%. Information, culture and recreation and transportation and warehousing each contributed 19,000 jobs. Accommodation and food services added 17,000. Tariff-sensitive manufacturing also posted gains. The one clear drag was wholesale and retail trade, which shed 35,000 positions, the steepest sectoral loss of the month.
Ontario accounted for the largest provincial gain at 42,000 jobs, with its unemployment rate dropping 0.5 percentage points to 7.0%. British Columbia added 25,000 jobs, though its unemployment rate held steady at 6.8%. Alberta picked up 14,000 positions, trimming its jobless rate 0.4 points to 6.6%. Saskatchewan was the sole provincial outlier, shedding 6,100 positions as its unemployment rate climbed 0.6 points to 6.2%.
Youth aged 15 to 24 saw unemployment fall 0.9 percentage points to 13.4%, and full-time positions for that cohort jumped by 99,000. Statistics Canada noted the improvement represents a better start to the summer job season than the difficult conditions of 2025. Even so, 13.4% still runs well above the pre-pandemic average of 10.8%.
The wage data may complicate the picture at the Bank of Canada. Average hourly earnings rose 3.0% year-over-year in May, bringing the average to $37.24. That is a sharp deceleration from the 4.5% annual pace recorded in April, on a not-seasonally-adjusted basis.
Statistics Canada reported the prior week that GDP stalled in Q1, though flash estimates pointed to a real GDP rebound at the start of Q2. Many economists have argued the weakness does not yet constitute a recession, despite two consecutive quarters of GDP decline.
On a year-over-year basis, Canadian employment stood at 147,000 jobs, or 0.7%, above May 2025 levels.
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