Canada’s labour market bounced back sharply in May, adding 88,000 jobs and pushing the national unemployment rate down to 6.6 per cent, according to Statistics Canada. The stronger-than-expected report marks the first major employment gain since November 2025 and offers a key economic signal ahead of the Bank of Canada’s next interest rate decision.
The May increase helped recover part of the job losses recorded earlier this year. Statistics Canada said the economy shed 112,000 net positions during the first four months of 2026 before last month’s rebound.
Economists had expected a far smaller gain of about 10,000 jobs and had forecast the unemployment rate to stay at 6.9 per cent.
Full-Time Jobs Lead May Employment Rebound
Statistics Canada said employment growth in May came mainly from full-time work and spread across several sectors.
Construction posted the largest increase, adding 27,000 jobs. The information, culture and recreation sector also recorded gains, along with transportation and warehousing. Manufacturing, a sector closely watched because of tariff-related pressure, also added jobs during the month.
The gains were not universal. Wholesale and retail trade saw the steepest decline, losing 35,000 positions in May.
Wage growth also cooled. Average hourly wages rose three per cent year-over-year in May, down from 4.5 per cent in April.
Youth Employment Improves Ahead Of Summer
The report also showed a stronger start to the summer job season for young workers compared with last year’s difficult labour market.
Workers aged 15 to 24 added 99,000 full-time jobs in May. Their unemployment rate fell for the first time since January, landing at 13.4 per cent.
Despite the improvement, youth unemployment remains above the pre-pandemic average of 10.8 per cent, showing younger Canadians still face a tougher hiring environment than before COVID-19.
Jobs Report Lands Before Bank Of Canada Rate Decision
The May labour force report is the final major economic release before the Bank of Canada announces its next interest rate decision on Wednesday.
The jobs rebound follows recent data from Statistics Canada showing economic growth stalled in the first quarter. Flash estimates suggested real gross domestic product began rising again at the start of the second quarter.
Many economists have argued recent weakness has not yet reached recession territory, even with GDP declining for two straight quarters. The latest jobs numbers give policymakers fresh evidence to weigh as they assess employment, inflation and growth risks.
