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Economic News

Canada: May Jobs Rebound Is a Bright Spot in an Otherwise Weak Economy

June 5, 2026
Laura Gu
Senior Economist

Highlights

  • Canada added 88k jobs in May, beating market expectations for a 10k increase. The unemployment rate fell 0.3 percentage points (ppts) to 6.6% in the month.
  • Total hours worked rose 0.6% month over month and were up 0.3% year‑over‑year.
  • Average hourly wage growth decelerated to 3.0% y/y in May from 4.5% in April. Table 1 summarizes key labour market indicators.
  • The May employment data left our Q2 real GDP growth tracking at 1.5% annualized, broadly in line with the Bank of Canada’s latest Monetary Policy Report.

Comments

Canadian employment rebounded sharply in May, rising 88k and largely unwinding losses earlier in the year. Gains were entirely driven by a surge in full‑time employment (+154k) (graph 1). On net, employment now sits just 24.5k below its December 2025 peak and remains flat on a year-over-year basis.

Employment gains in May were broad-based, led by construction (+27k), information, culture and recreation (+19k), transportation and warehousing (+19k) and accommodation and food services (+17k). Manufacturing employment rose 15k in the month but remained flat y/y and was down 44k relative to January 2025, reflecting heightened uncertainty in the sector tied to US tariffs.

The participation rate held steady at 65.0% in May, though it remains 0.3 percentage points below its level a year ago. Strong employment gains alongside flat participation pushed the unemployment rate down to 6.6%, though it remains above the 6.4% level in 2024 that preceded the current trade volatility.

Youth employment improved as students entered a stronger summer job market than a year ago, though conditions remain challenging (graph 2). The unemployment rate for those aged 15–19 fell 2.9 ppts to 19.4% in May but remains well above the pre‑pandemic average of 14.7%. Among those aged ­20–24, the unemployment rate edged up to 10.4%, below the August 2025 peak of 11.9% but still elevated relative to the pre‑COVID average of 8.6%.

May job gains were led by Ontario (+42k) and British Columbia (+25k). Alberta added 14k jobs, with employment up a strong 4.1% y/y. Quebec posted a modest gain (+13k) following a 91k decline over the past three months. Employment fell modestly elsewhere in May.

Canada’s working‑age population (aged 15 to 64) fell in May, albeit at a slower pace (graph 3). This aligns with our expectations External link. of two consecutive years of population decline before growth resumes.

Implications

May’s job gains were welcome news for an economy that’s stuck in neutral. That said, one print doesn’t make a trend. Overall conditions remain weak amid persistent trade uncertainty. High energy prices should offer a modest tailwind to the economy despite more elevated inflation, though impacts are uneven across regions. When combined with the unexpected contraction in Q1 real GDP External link., this reinforces our view that the Bank of Canada is likely to remain on the sidelines for the rest of the year.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.