Canada’s Job Market Slows as Unemployment Rises Again

PCI

Canadians are also spending more time unemployed. (Pexels Photo)

Canada’s unemployment rate rose to 7% in May, its highest level since 2016, excluding the COVID-19 period. About 1.6 million Canadians are now without work, marking a nearly 14% increase from last year, according to new data from Statistics Canada.

Despite the rising rate, there haven’t been widespread layoffs. Instead, the issue is that job creation isn’t keeping up with population growth. Only 8,800 new jobs were added last month—well below what’s needed to keep up with demand.

“People are facing greater difficulties finding work in the current labor market,” the agency noted.

Economists believe that recent U.S. tariffs are starting to affect Canada’s economy, particularly in the automotive and metal industries. Although the broader impact remains unclear, hiring has slowed, and some layoffs have already occurred.

“There’s not a lot of movement right now,” said Doug Porter, chief economist at BMO. “It is early days to judge” the full effect of the tariffs.

The quality of new jobs also raises concerns. While there was a rise in full-time work (up 57,700), part-time jobs dropped by nearly 49,000, balancing out most of the gain. Sectors such as retail and wholesale experienced modest job growth, while manufacturing and temporary government roles declined.

Canadians are also spending more time unemployed. On average, it now takes about 22 weeks to find a new job—up from around 18 weeks a year ago.

Wages grew by 3.5% in May for permanent employees, the same as in April.

This slow wage growth may ease inflation concerns but offers little help to struggling workers.

With interest rates still high, markets are unsure whether the Bank of Canada will lower rates in July. As of now, there’s only a 33% chance of a rate cut, according to financial forecasts.

Though the labor market isn’t in a crisis, the slow pace of hiring and rising joblessness suggest growing pressure on workers and policymakers alike.