Question Period Note: Labour Force Survey – May 2025

• Employment rose by a modest 8,800 in May, above expectations of a decline of 10,000.
• The unemployment rate increased to 7.0% (+0.1 p.p.), in line with market expectations. The labour force participation was unchanged at 65.3%.

• Employment rose by 8,800 jobs in May despite expectations for a decline.
• This brings the number of jobs created over the past year to 280,000.
• Still, unjustified U.S. tariffs and trade uncertainty are weighing on the Canadian economy and the labour market – with the unemployment rate rising to 7.0 per cent in May.
• The Government has a clear, comprehensive plan to defend Canadians jobs and businesses in the face of unjustified U.S. measures.
• A robust suite of federal supports is available to assist businesses and workers directly impacted by U.S. tariffs.
• The government remains firmly committed to building the strongest economy in the G7.

• Bottom Line: Job gains exceeded expectations but remained subdued, consistent with ongoing labour market cooling. The unemployment rate rose for a third straight month, reaching its highest level since September 2016 excluding pandemic-related spikes, while total hours worked were flat. That said, some details were firmer—private employment reversed recent losses, and gains were concentrated in full-time work. Wage growth held steady, while population growth continued to slow after stabilizing in recent months. Overall, the report reflects a softening labour market amid the ongoing trade conflict, albeit with some underlying resilience.
• Key Labour Market Indicators: Employment rose by 8,800 in May, following a 7,400 gain in April. With steady labour force participation (65.3%) and moderate population growth, job gains fell short of labour force growth, pushing up the unemployment rate to 7.0%. It has now increased for three straight months and is at a post-pandemic high. The employment rate held steady at 60.8%.
• Full-Time Jobs and Hours Worked: Gains were concentrated in full-time jobs (+57,700), partly offset by a decline in part-time jobs (-48,800). The share of full-time workers rose to 82.0% (+0.3 p.p.), above the 2019 average (81.0%). Total hours worked were unchanged and remain below their January peak.
• Hiring and Layoffs: Rising unemployment largely reflects difficulty finding work. A smaller share of people who were unemployed in April found a job in May (22.6%), compared with one year earlier (24.0%) and the 2017-2019 average for the same months (31.5%). Meanwhile, the layoff rate—the proportion of people who were employed in April but were laid off in May—was 0.6%, unchanged from a year ago.
• Industries: Job gains were primarily in wholesale and retail trade (+42,800), largely erasing the previous two months of losses. On the other hand, more trade-exposed sectors continued to decline, driven by manufacturing (-12,200) and transportation and warehousing (-15,500). Public administration also pulled back as temporary hiring for the federal election unwound. Private sector employment (+60,600) surged, while the public sector (-21,300) and self-employment (-30,400) declined. The share of all workers in private sector paid employment rose to 65.5% (+0.3 p.p.), just below its 2019 average (65.7%).
• Provinces: Six of ten provinces saw employment rise in April, led by British Columbia (+13,000), Nova Scotia (+10,600), and New Brunswick (+7,600). Quebec posted the largest decline (-17,000) driven by manufacturing, while other provinces were relatively unchanged. The unemployment rate rose in five of ten provinces, led by Prince Edward Island (+1.6 p.p.), Manitoba (+0.6 p.p.), and Alberta (+0.4 p.p.).
• Demographics: The unemployment rate rose for men (+0.2 p.p.) and youth (+0.1) while remaining unchanged for women and older (aged 55+) workers. Employment for women rose (+17,800) while pulling back for men (-8,900).
• Wages: Headline wage growth was unchanged at 3.4% year-over-year and has generally trended downward since last June, though it remains above its 2019 average (2.7%). Adjusting for the composition of the workforce, wage growth held slowed to 3.9% year-over-year in May (-0.2 p.p.).

None