A surprisingly strong May ’26 employment report has reinforced many economists’ views that the Canadian economy may not be in a ‘technical recession.’
On Friday, 5 June, Statistics Canada reported that the economy added 88,000 jobs during May ’26. This revelation topped economists’ expectations for a gain of 10,000 positions.
The agency also said that the unemployment rate declined to 6.6% last month. This was down from 0.3% of 6.9% recorded the month before, in April ’26.
The gains for May ’26 were the first significant increase in employment since 7 months ago, in November ’25. The Canadian economy had shed 112,000 net jobs during the first 4 months of ’26.
Assistant Chief Economist at RBC, Nathan Janzen, said that the details of the May ’26 employment report were just as encouraging as the headline figures. Janzen added that, despite the usual volatility in the monthly job numbers, there were still indicators that labor markets were broadly improving.
StanCan reported that the last month’s growth concentrated on full-time jobs and spanned various industries.
The construction sector led the way with a gain of 27,000 jobs. The information sector, along with the culture and recreation sectors, followed closely behind. In addition, the transportation sector also experienced growth, along with the warehousing sectors. The tariff-sensitive manufacturing sector also posted job gains during the month of May ’26.
However, the wholesale & retail trade sectors took heavy hits, with a loss of 35,000 positions during the same month of May ’26.
Janzen added that given the rapid reversal in population growth trends, tracking the health of Canada’s labor market, guided solely by the number of jobs gained or lost, may give an incomplete scenario. He added that trends in the unemployment rate have been… ‘choppy. ‘The general downward trajectory is encouraging.
Janzen added that StatCan also continues reporting a low rate of layoffs. This isn’t consistent with an economy in recession.
