Canada’s unemployment rate rose to 7% in May, the highest it’s been since 2016 outside of the pandemic years. According to Statistics Canada, job growth has remained flat since January, with only 8,800 new jobs added last month. The private sector finally showed signs of recovery, while the public sector saw declines following the end of election-related hiring. Full-time jobs increased by 58,000, but part-time positions dropped by 49,000, nearly offsetting the gains.
Unemployment Rate in Canada
🏠Job Losses Continue in Key Sectors
While some industries like wholesale, retail, and recreation saw growth, other major sectors faced further setbacks. Public administration lost over 32,000 jobs, and manufacturing continued its decline, shedding 12,200 more roles after already losing 31,000 in April. Economists warn that this trend signals a cooling labour market. BMO’s Chief Economist Douglas Porter noted that the rise in the unemployment rate could push the Bank of Canada toward more rate cuts — with the next interest rate decision scheduled for July 30.
đź“Š Canadians Struggling to Find Work
There are now 1.6 million unemployed Canadians, a 13.8% increase compared to last year. On average, job seekers are spending over 21 weeks looking for work — up from 18 weeks in 2024. Students are especially hard hit, with unemployment among youth returning to school jumping to 20.1%, up more than 3% year-over-year. These numbers point to growing challenges for those trying to re-enter the workforce in today’s economy.
🏡 What This Means for Your Mortgage
Despite labour market softness, wages are still growing, with average hourly earnings up 3.4%. But with job market slack increasing, the Bank of Canada may feel pressure to lower rates further — which could directly affect mortgage rates. Lower interest rates would benefit homebuyers, those renewing mortgages, and anyone holding a variable-rate product.
đź’¬ If you’re wondering how this economic shift could impact your mortgage plan, Garland Mortgage is here to help. Reach out today to review your strategy and explore your options.
