Canadian Employment (May 2025)

Canadian job market treads water in May, tariff affected areas show strain

• The Canadian labour market basically tread water again in May, adding only 8.8k net new positions (+0.0% month/month). The details were slightly better, with the private sector up 61k positions (+0.4% m/m), and solid gains in full-time jobs (58k). However, these were mostly offset by losses in part-time jobs (-49k). 
• The unemployment rate rose for the third consecutive month to 7.0%, the highest rate since September 2016 (apart from the pandemic). The labour force grew by 0.2% m/m. Growth in the labour supply has slowed in recent months, but employment growth has slowed further. 
• The job market is even tougher for students. The unemployment rate for returning students (aged 15-24) was 20.1% -- the highest since the 2009 recession (excluding the pandemic). 
• The impact of tariffs shows up in the industry pattern and regional unemployment pattern. The manufacturing sector was down (-12.2k), as was transportation and warehousing (-15.5k). Manufacturing has lost jobs for four months now, totaling 55k. That said, the wholesale and retail trade sector recouped some (+43k) of the 55k jobs lost through march and April. The highest unemployment rates across CMAs were in Windsor (10.8%), Oshawa (9.1%) (three-month moving averages), which have both seen significant increases since January. 
• Wage growth was steady in May. Average hourly wages rose 3.4% versus a year ago, matching April's pace. Lastly, total hours worked were flat.                

Key Implications

• Canada's labour market continued to soften in May. The unemployment rate continued to rise, and the impact of U.S. tariffs is clearly evident in industry and regional patterns. Wage gains were steady in May but have cooled from a roughly 5% pace a year ago.
• On Wednesday, the Bank of Canada opted to wait and see how tariffs would impact the Canadian economy, while also weighing recent hotter than expected inflation readings. 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.

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