The $30 million jobs report that changed the narrative

A surprisingly strong May jobs report has reinforced many economists' views that the Canadian economy is not in a recession. The unemployment rate fell to 6.6 per cent last month, down from 6.9 per cent in April.

The gains for May were the first significant increase in employment since November, with the economy shedding 112,000 net jobs in the first four months of 2026.

Nathan Janzen, assistant chief economist at RBC, said the details of the May jobs report were just as encouraging as the headline figures.

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Growth last month was concentrated in full-time work, 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, while the wholesale and retail trade sector took the heaviest hit with a loss of 35,000 positions in the month.

Janzen said that, given the rapid reversal in population growth trends, tracking the health of Canada's labour market solely by the number of jobs gained or lost can give an incomplete picture.

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StatCan also continues to report a low rate of layoffs, Janzen noted, which is not consistent with an economy in recession.

It reinforces that the broader economic data backdrop that we have in hand right now does not look recessionary, he said.

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.

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Many economists have said recent economic weakness doesn't yet rise to the bar of a recession despite GDP declining for two consecutive quarters.

The C.D.Howe Institute's Business Cycle Council -- the traditional arbiter of whether Canada is in a recession or not -- said in a bulletin before the latest job figures were published Friday that it was too soon to use that label based solely on a pair of small quarterly contractions in the economy.

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.

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The economy isn't booming, but it isn't falling apart, either, he said.

StatCan also said Friday that 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 saw a gain of 99,000 full-time positions in May and the age group's jobless rate fell for the first time since January.

A familiar pattern from the 2019 crash

Average hourly wages rose three per cent in May compared with year ago, down from a 4.5 per cent year-over-year increase in April.

The May jobs report marks the last major economic release before the Bank of Canada's interest rate decision on June 10.

The central bank has held its benchmark interest rate steady at 2.25 per cent in four consecutive decisions.