Canada’s economy experienced a substantial increase of 88,000 jobs in May, surpassing analysts’ expectations and partially offsetting previous job losses this year. The addition of jobs in May helped recover nearly 80% of the net job losses recorded in the first four months of 2026. This surge in employment, the first significant gain since November, was reported by Statistics Canada. The unemployment rate also declined to 6.6% in May from 6.9% in the previous month, contrary to forecasts of a steady rate of 6.9% and an anticipated net gain of 10,000 jobs.
The job growth in May primarily focused on full-time positions, with a net increase of 154,000 jobs, effectively reversing most of the previous net losses in this category. Conversely, part-time employment saw a decrease of 66,200 jobs. Over the past year, the Canadian economy has faced challenges due to U.S. tariffs and trade uncertainties, leading to job cuts and hampering overall hiring.
Benjamin Reitzes, managing director of BMO Economics, described the recent job report as remarkably positive, emphasizing the resilience of the Canadian economy. However, he cautioned against overexcitement, noting that year-over-year employment growth stood at 0.7%. These encouraging employment figures come after recent negative news of a second consecutive quarterly GDP contraction, raising concerns about a possible technical recession.
The latest job data indicate a strong performance in various sectors, with notable job gains in construction, information, culture, recreation, transportation, and warehousing. Notably, the wholesale and retail trade sector experienced a decline of 35,000 positions in May, impacting a significant portion of the employed workforce. Additionally, the youth unemployment rate decreased to 13.4% in May, down from 14.3% in the previous month, reflecting a positive trend in youth employment.
The average hourly wages of permanent employees, a key metric monitored by the Bank of Canada for inflation expectations, grew by 3.2% in May, showing a decrease from the 4.8% growth in April. Despite the positive job data, experts anticipate that the Bank of Canada will maintain its interest rates at 2.25%, based on the latest economic indicators. Looking ahead, economists suggest that the job market remains stable but subdued, with slow job growth expected in the near future, especially as Canada’s population growth has stagnated.