Canadian Unemployment Rate Has Now Hit 7%

Canada's unemployment rate rose to 7% in May, the highest in over eight years excluding the pandemic, with only 8,800 jobs added. Full-time employment increased by 58,000, but part-time work declined, and private sector jobs grew while public sector employment fell. Manufacturing lost 12,200 jobs, contributing to a four-month decline of 55,000, and transportation and warehousing also shed 15,000 positions. Economists attribute the rise in unemployment to US tariffs, which have hit trade-sensitive regions like Windsor and Oshawa hard. Youth unemployment reached 20.1%, and the employment rate held steady at 60.8%. Average hourly wages rose 3.4% year-over-year, but Bank of Canada policymakers are watching developments closely, holding rates at 2.75% amid inflation concerns. Economists expect the unemployment rate to continue rising in the second half of the year, but further interest rate cuts from the Bank of Canada could help stabilize conditions. The jobless rate is expected to peak above 7% before potentially decreasing in 2026.