The Canadian economy added 8,800 jobs in May, more than the 2,000 consensus estimate in an Econoday survey of forecasters. The unemployment rate rose to 7.0 percent from 6.9 percent, as expected, the highest level since September 2016 when excluding the pandemic years. The participation rate remained steady at 65.3 percent.

The average hourly wage growth remained stable at 3.4 percent year-over-year and total hours worked were unchanged on the month, for a 12-month increase of 0.9 percent.

Over the month, the economy added 57,700 full-time positions while shedding 48,800 part-time jobs.

The private sector added 60,600 jobs in May, the first increase since January. Public sector employment was down 21,300 after the federal election had boosted temporary employment in April. Self-employment was down 30,400, the first significant decrease since May 2023.

Despite the rebound in private sector employment, the report indicated greater difficulties to find a new job, likely reflecting tariff-related uncertainties making businesses reluctant to hire at a time they are also seeking to integrate artificial intelligence into their workflow. The average duration of unemployment reached 21.8 weeks in May, up from 18.4 weeks a year earlier. The statistics agency also noted that the share of unemployed people who transitioned into employment declined to 22.6 percent in May from 24.0 percent a year earlier. What's more, nearly half of people unemployed in May had not worked the previous 12 months or had never worked, up from 40.7 percent in May 2024.

Looking at sectors, goods-producing industries trimmed 13,000 jobs, led by the tariff-exposed manufacturing sector, which shed 12,200 positions. Employers were also reluctant to hire in construction, with employment down 7,400.

Services added 21,800 jobs on the month, led by wholesale and retail trade that saw a 42,800 surge. Information, culture and recreation added 19,300 positions, followed by finance, insurance, real estate, rental and leasing with 12,400, and health care and social assistance with 10,300.

By contrast, employment plunged 32,200 in public administration, was down 16,400 in accommodation and food services, 15,500 in transportation and warehousing, and 14,500 in business, building and other support services.

With today's data, Econoday Relative Performance index (RPI) stands at 15, still showing the economy has been performing more strongly than expected.

Employment seen up a marginal 2,000 with the jobless rate up to 7.0 percent from 6.9 percent.

The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.

As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.

The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.

The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.

The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.