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Or sign-in if you have an account.Workers assemble wood furniture at a workshop in Victoria, British Columbia. Photographer: James MacDonald/Bloomberg Photo by James MacDonald /Bloomberg(Bloomberg) — Employment in Canada increased by a surprising 87,800 in May after a soft start to the year for the labor market, bringing the jobless rate down to 6.6%.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe increase in employment was driven by full-time work and was observed across industries, Statistics Canada reported on Friday. Economists surveyed by Bloomberg were expecting a modest 10,000 employment gain, and for the jobless rate to hold steady at 6.9%.The monthly job growth was the largest since December 2024. Still, it only partially reversed a loss of 112,000 jobs in the first four months of the year.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe data were released at the same time as figures showing US job growth also topped all estimates. The loonie rallied versus the US dollar, gaining about 0.1% to C$1.3897 of 9:34 a.m. in Ottawa. Canadian bonds slid across the curve, with the two-year yield up about 10 basis points to 2.911% — the biggest intraday jump since May 4. Swaps traders raised their expectations of Bank of Canada interest-rate hikes and now see more than 30 basis points of tightening by December.“Just when you think Canada is crumbling amid a string of negative data points, things reverse,” Benjamin Reitzes, managing director of Canadian rates and macro strategist at Bank of Montreal, said in a report to investors. “We’ve seen this story a few times in the past year. The economy isn’t booming, but it isn’t falling apart, either.”While the labor force survey is notoriously volatile, the May report alongside a flash estimate for real gross domestic product in April suggest a potential rebound for the economy in the second quarter.Statistics Canada reported last week that the economy contracted slightly over the first three months of the year — following a decline in the fourth quarter as well — but a preliminary estimate suggests it grew by 0.4% in April.Friday’s job report marked the first significant employment gain since November 2025, the statistics agency said. It also noted that employment was up by 147,000, or 0.7%, on a year-over-year basis.As well, the report carried good news for young people, who have been facing significant hiring challenges. The jobless rate for youth fell by 0.9 percentage points to 13.4%. The unemployment rate for returning students was also down 2.1 percentage points relative to May 2025, sitting at 18% last month.The Bank of Canada has held its policy rate at 2.25% for four straight meetings, choosing to look through the short-term impact of higher oil prices on inflation while keeping an eye on softer economic conditions. It next sets rates on Wednesday.Despite the strong gains in May, employment is still almost 25,000 lower than it was at the end of 2025 and the labout market continues to look stalled, Charles St-Arnaud, chief economist at Servus Credit Union, said in an email. “This does not change our view that the Bank of Canada will keep its policy rate unchanged for the rest of the year, as it balances the deflationary forces of a stalled domestic economy with the inflationary pressures of continued high energy costs.”Canada’s labor market showed signs of life in May, with a strong rebound in job creation, Royce Mendes, managing director and head of macro strategy at Desjardins Securities, said in a report to investors.“That said, given the volatility in the labor force survey, it’s difficult to have much confidence in the signaling power of today’s reading. We continue to see downside risks for the Canadian economy both from fundamental weakness and trade negotiations,” he said. Construction led the job gains in May with a 27,000 increase in employment. Information, culture and recreation as well as transportation and warehousing added 19,000 jobs each.Meanwhile, employment fell by 35,000 in wholesale and retail trade. StatCan noted employment in the industry has been in a downward trend since October 2025, with employment in May down by 64,000 compared to a year ago.Employment increased the most in Ontario, rising by 42,000 and bringing the jobless rate down to 7% — the lowest it has been since September 2024.Wage growth for full-time permanent employees increased by 3.2% annually, down from 4.8% in April and weaker than the 4.6% economists were expecting.—With assistance from Mario Baker Ramirez and Carter Johnson.(Updates market reaction, adds more economist reaction, starting in the fifth paragraph.) Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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