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Labour Force Survey May 2025: Shuffling to the side
Employment in May was essentially flat, rising by only 8,800. The unemployment rate edged up 0.1 points to 7%, its highest since September 2016 (excluding the pandemic).
Andrew DiCapua
“Canada’s labour market is holding steady despite significant risks from the U.S. tariffs. It doesn’t seem like the floor has fallen out yet, but weakness is building in parts of the country with acute exposure to sectors impacted by tariffs. The unemployment rate rising once again is a signal that the economy is operating below its potential, a situation that the Bank of Canada will need to recognize in the upcoming meetings, as they contemplate risks to inflation.”
KEY TAKEAWAYS
- Employment in May was essentially flat, rising by only 8,800, leaving the employment rate at 60.8%. The unemployment rate edged up 0.1 points to 7%, its highest since September 2016 (excluding the pandemic). Total hours worked were unchanged on the month but up 0.9% year-over-year.
- Demographically, core-aged women saw employment gains (+42k; +0.6%), while core-aged men experienced losses (-31k; -0.4%); youth and those 55+ were little changed. This divergence underscores uneven labour demand across groups.
- Sector shifts included gains in wholesale and retail trade (+43k; +1.5%), information/culture/recreation (+19k; +2.3%), finance/insurance/real estate/rental/leasing (+12k; +0.8%), and utilities (+4,900; +3.1%). Offsetting losses occurred in public administration (-32k; -2.5%) likely reversing election-related workers, accommodation and food services (-16k; -1.4%), transportation and warehousing (-16k; -1.4%), and business/support services (-15k; -2.1%).
- Provincially, employment rose in British Columbia (+13k; +0.4%), Nova Scotia (+11k; +2.1%), and New Brunswick (+7,600; +1.9%), while Quebec (-17k; -0.4%), Manitoba (-5,800; -0.8%), and PEI (-2,700; -2.9%) declined. Unemployment rates moved higher in Ontario at 7.9% (+0.1) and BC at 6.4% (+0.2). Quebec declined to 5.8% (-0.2). Southwestern Ontario cities are experiencing much higher unemployment rates, with Windsor and Oshawa at 10.8% and 9.1% respectively.
- Wage growth has eased, rising 3.4% year-over-year, matching April’s pace. The number of unemployed reached 1.6 million (+13.8% y/y), with average duration at 21.8 weeks (versus 18.4 weeks a year earlier), indicating greater difficulty in job-finding, especially for returning students facing a challenging summer.
- The flat employment and rising unemployment signal softening labour demand. However, tariffs will continue to show their impact in affected sectors and communities. The Bank of Canada maintains a cautious, data-dependent stance, holding policy rates, but will see further weakening employment in advance of their July decision.
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