Canada's jobs market ‘treading water' as unemployment rate rises to 7% in May

Hamilton Spectator

3 days ago

OTTAWA - Job growth has been virtually non-existent in the country since the start of the year, Statistics Canada said Friday.
Canada's jobless rate rose a tenth of a point to seven per cent in May amid a gain of 8,800 jobs in the month, the agency said in its latest labour force survey.
That's up from 6.6 per cent at the start of the year and marks the highest unemployment rate since 2016 outside the pandemic years, StatCan said.
TD senior economist Leslie Preston said in a note to clients that the Canadian labour market was 'basically treading water' in May.
A gain of 58,000 full-time positions was offset by a loss of 49,000 part-time roles in May.
The wholesale and retail trade sector, which faced losses in April and March, rebounded to lead growth with 43,000 jobs added last month. Information, culture and recreation also saw gains in May.
Public administration lost 32,000 jobs last month, StatCan said, leading losses by industry and offsetting gains in the sector tied to the federal election in April. The accommodation and food services sector, as well as the transportation and warehousing industry, shed jobs last month.
'Overall, there has been virtually no employment growth since January,' StatCan said in the release. That comes after gains of 211,000 net jobs from October through January.
Canadians are also typically spending longer time out of work, the agency said. Unemployed people had spent an average of 21.8 weeks looking for a job in May, up from 18.4 weeks for the same month a year earlier.
Average hourly wages rose 3.4 per cent annually in May, the same pace as April.
StatCan said it's also looking like an increasingly tough summer jobs market for students.
Roughly one in five returning students aged 15 to 24 – those heading back to school in the fall – were unemployed in May, the agency said.
StatCan said the jobless rate for this group has trended up annually each May since 2022, when just over one in 10 returning students were unemployed in a relatively tight labour market. The last time the jobless rate for students was about this high was May 2009, outside the pandemic years.
The Bank of Canada will be parsing the labour market data closely as it looks for signs of how Canada's tariff dispute with the United States is affecting the economy.
The manufacturing sector, which was hard-hit in April, shed some 12,200 jobs in May.
StatCan said cities in southwestern Ontario's manufacturing corridor are particularly facing an 'uncertain economic climate' as automakers contend with tariffs on motor vehicles and parts. Windsor, Oshawa and Toronto top StatCan's chart of the top 20 census metropolitan areas by unemployment rate, based on three-month moving averages.
The Bank of Canada held its benchmark interest rate steady for the second time in a row on Wednesday. Its next decision is set for July 30.
'May's jobs report puts another mark in the economic weakness tally. We think this will ultimately lead to further rate cuts from the Bank of Canada,' Preston said.
BMO chief economist Doug Porter said in a note that he gives the May jobs report a 'passing grade' for its strength in private sector and full-time work.
'But the persistent rise in the jobless rate is a loud warning bell,' he said.
'The main point is that slack is still growing in the labour market, suggesting that the Bank of Canada may not be done cutting rates just yet.'
CIBC senior economist Andrew Grantham said in a note that he sees a return to interest rate cuts in July amid 'slack' building gradually in the labour market.
He added the caveat that the central bank will get another jobs report and plenty of other economic data before its next decision.
This report by The Canadian Press was first published June 6, 2025.