The labour market rebounded with a surprise gain of 88,000 jobs in May, partially offsetting a bigger drop in employment since the start of the year, Statistics Canada said Friday.
The agency said the unemployment rate fell to 6.6 per cent in May, down from 6.9 per cent in April.
StatCan said May’s gains were the first significant increase in employment since November 2025. The economy had shed 112,000 net jobs in the first four months of 2026.
Economists had broadly expected a more modest gain of 10,000 jobs in May and that the unemployment rate would hold steady.
Growth last month was concentrated in full-time work, StatCan said, and was widespread across industries.
Construction led the way with a gain of 27,000 jobs, followed by the information, culture and recreation sector and the transportation and warehousing industry. Tariff-sensitive manufacturing also posted job gains in May.
The wholesale and retail trade sector took the heaviest hit with a loss of 35,000 positions in the month.
Average hourly wages rose three per cent in May, down from 4.5 per cent in April.
StatCan said youth are seeing a better start to the summer job season this year compared with a tough labour market in 2025.
Young workers aged 15 to 24 added 99,000 full-time positions in May and the age group’s jobless rate fell for the first time since January. The youth unemployment rate stands at 13.4 per cent in May, still above the pre-pandemic average of 10.8 per cent.
The May jobs report marks the last major economic release before the Bank of Canada’s interest rate decision on Wednesday, and it comes after a period of turbulent data.
StatCan reported a week ago that economic growth stalled in the first quarter, though the agency’s flash estimates suggested real gross domestic product was on the rise again to start the second quarter.
Many economists have said recent economic weakness doesn’t yet rise to the bar of a recession despite GDP declining for two consecutive quarters.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said in a note Friday that the solid May jobs report “should silence the recession crowd.”
He said the economy continues to show resilience in the face of trade pressures from the United States and the energy price shock from the Iran war.
“Just when you think Canada is crumbling amid a string of negative data points, things reverse. We’ve seen this story a few times in the past year. The economy isn’t booming, but it isn’t falling apart, either,” he said.
TD Bank senior economist Andrew Hencic said in a note that “there continues to be a lot of noise in the Canadian economic data,” but the strong jobs report reinforces his expectation that activity will bounce back in the second quarter.
He said the economy nonetheless continues to operate below potential — offering an offset to inflationary pressures and allowing the Bank of Canada to remain on hold at next week’s meeting.
The central bank has held its benchmark interest rate steady at 2.25 per cent in four consecutive decisions.
This report by The Canadian Press was first published June 5, 2026.
By Craig Lord | Copyright 2026, The Canadian Press. All rights reserved.