Canada’s Unemployment Climbs To 7% As Canadian Job Market Stalls

Canada’s unemployment rate reached 7.0% in May 2025, marking its highest point since September 2016, excluding the pandemic years. This 0.1% increase from April underscores the economic challenges facing the nation.

Despite the rise, the job market showed resilience. The economy added 8,800 jobs, though this was statistically insignificant, keeping the employment rate steady at 60.8%. A notable shift towards full-time employment was observed, with 58,000 jobs added, offsetting a loss of 48,800 part-time positions.

Sector performance varied, with growth in wholesale and retail trade, utilities, and finance, while manufacturing and transportation experienced declines. Trade tensions with the U.S. continue to impact sensitive industries.

Projections suggest unemployment may rise to 7.5% by summer, particularly affecting students and seasonal workers. However, Canada’s economy has shown resilience with a year-over-year job growth of nearly 280,000, indicating underlying strength amidst challenges.

Deeper Dive into Canada’s Job Market Challenges and Resilience

The shift towards full-time employment is a positive sign, with 58,000 full-time jobs added in May, offsetting the loss of 48,800 part-time positions. This trend reflects a structural change in the labor market, where employers are increasingly favoring full-time roles despite broader economic uncertainties.

The private sector demonstrated strength, with employment growing by 61,000 jobs, while the public sector saw a decline of 21,000 positions. This reversal follows a temporary increase in public sector hiring in April, largely attributed to federal election-related activities.

Manufacturing continues to struggle, shedding 12,200 jobs in May and 55,000 over the past four months. Transportation and warehousing also faced significant challenges, losing 15,000 jobs. These declines are linked to ongoing trade tensions, particularly with the U.S., which have disrupted supply chains and reduced demand in these sectors.

While some industries are experiencing hardship, others are showing signs of growth. The wholesale and retail trade sector, utilities, and information, culture, and recreation sectors all saw employment increases. The finance, real estate, and insurance sectors also contributed to job growth, adding to the overall resilience of the economy.

The impact of economic uncertainty is particularly pronounced for students and seasonal workers. Sectors such as accommodation and food services, which often rely on summer hiring, are experiencing slower growth, making it difficult for young people and temporary workers to secure employment.

Despite these short-term challenges, Canada’s labor market has shown notable growth over the past year. Since May 2024, nearly 280,000 more Canadians have found employment, representing a 1.3% year-over-year increase. This underscores the underlying strength of the economy, even as it navigates current headwinds.

Conclusion

Canada’s unemployment rate reaching 7.0% in May 2025 highlights the current economic challenges, yet the job market has shown resilience. The addition of 8,800 jobs, driven by a shift toward full-time employment, underscores the economy’s underlying strength. While sectors like manufacturing and transportation face difficulties due to trade tensions, growth in wholesale, retail, and finance sectors provides optimism. The year-over-year job growth of nearly 280,000 jobs indicates Canada’s ability to navigate economic uncertainties, though challenges remain for students and seasonal workers in the coming months.

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