Canadian Employment (May 2026)

Canada's unemployment rate tumbles as full-time jobs jump  

• Canada’s economy added 88k jobs in May (+0.4% m/m), handily beating consensus expectations for a 10k gain. The increase was driven by full‑time work, which rose by 154k, while private‑sector employment increased by 56k.  
• The unemployment rate fell to 6.6% from 6.9%, as employment gains outpaced labour supply. The labour force was little changed (+3.8k), leaving the labour force participation rate unchanged at 65.0%.  
• Job gains were broad‑based across industries, led by construction (+27k), information, culture and recreation (+19k), transportation and warehousing (+19k), accommodation and food services (+17k), and manufacturing (+15k). These increases were partly offset by declines in wholesale and retail trade (-35k).  
• Average hourly wages rose 3.0% y/y in May, easing from 4.5% y/y in April.               

Key Implications

• No bones about it, this is a solid report. Strength in hiring across public and private sectors, and a whopping 154k jump in full-time jobs. However, this basically brings employment back to where it was in January, with an unemployment rate 0.1 percentage points higher.  
• There continues to be a lot of noise in the Canadian economic data. The surprise contraction in first quarter GDP was disappointing, but with April's flash GDP estimate signalling a 0.4% monthly gain and now May's labour force report showing a drop in the unemployment rate, we continue to expect a second quarter bounce-back in activity. Nonetheless, the economy continues to operate below capacity, providing a disinflationary offset to the energy price shock. With this backdrop we expect the Bank of Canada to stay on the sidelines next week and keep its policy rate at 2.25%.   

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