The $88 million jobs boost

Statistics Canada reported that the economy added 88,000 jobs in May, topping economists' expectations for a gain of 10,000 positions. 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, and the economy had shed 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.

Despite the usual volatility in the monthly job numbers, he said there are still signs that labour markets are broadly improving.

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, folloed 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.

What's behind the strong labour market?

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.

He said trends in the jobless rate have been choppy but the general downward trajectory is encouarging.

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.

What does this mean for interest rates?

Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said in a note 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 boomnig, but it isn't falling apart, either, he said.

What's next for the Canadian economy?

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 staedy at 2.25 per cent in four consecutive decisons.

Financial market odds for an interest rate hike from the Bank of Canada next week stood at more than 95 per cent as of Friday at noon, according to LSEG Data & Analytics.