Canada job crisis: Canada's unemployment rate hits 9-year high as inflation rises, factory losses, and youth struggle in the toughest market since 2016

Time of India

8 hours ago

Canada
is already facing problems with a slowing economy and rising
inflation
, and the job market is now flashing new warning signs. According to
Statistics Canada
, the unemployment rate has reached 7 percent in May, marking the highest level since September 2016(excluding the Covid 19 years of 2020-2021).
But despite the rising unemployment rates, the broader picture isn't all bleak. Full-time jobs rose by 58,000, largely resulting in the loss of about 49,000 part-time roles. The manufacturing sector lost another 12,000 jobs after April's losses.
But the wholesale, retail and information, and culture sector led the gains.
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What does this mean for real Canadians?
Sarah Thompson is a 52‑year‑old part‑time retail worker in Saint John, New Brunswick. With her hours cut last month, she's now working fewer than 20 hours weekly. 'It's tough to budget when your shifts disappear,' she says.
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In May, there were 1.6 million unemployed Canadians, a nearly 14 percent surge from last year.
The young population faces the brunt
Young people entering the workforce faced added hurdles as
youth unemployment
even rose to more than 20 percent in some surveys. Michael Chen, 22, said, 'I've applied to dozens of summer jobs, but I haven't heard back.' Meanwhile, the average job-seeker spent nearly 22 weeks looking for work, up from 18.4 weeks a year ago
Economists offer a mixed verdict
BMO's chief economist, Douglas Porter, called the rise in full‑time jobs 'a silver lining,' but cautioned the climbing jobless rate could still spell more monetary easing from the
Bank of Canada
.
Scotiabank's Derek Holt pointed to resilience in the labour market, outside public‑sector roles
Canada's Q1 GDP grew 0.5 percent, driven by export activity, a likely response to new US tariffs. But April's merchandise exports plunged 10.8 percent, leading to record deficits. Those tariffs have taken a toll on manufacturers and trade‑reliant communities.
The Bank of Canada, which held interest rates steady at 2.75 percent in early June, is watching closely. With sticky wage growth, average hourly earnings are up about 3.5–3.4 percent year‑over‑year. Officials face a delicate balance: support a softening labour market without reigniting inflation.