Canada’s unemployment rate surged in May, reaching its highest point since 2016, excluding the COVID-19 pandemic period, with 1.6 million people classified as jobless across the country, new data suggests.
The unemployment rate rose 0.1 percentage points to 7 percent last month, leading to a total of nearly 14 percent more jobless people compared to the same time last year, a newly released report from Statistics Canada said. It’s also a 6.6 percent rise since the beginning of the year.
The increase observed in May marked the third consecutive month of unemployment growth. The unemployment rate has escalated by a total of 0.4 percentage points since February, StatCan said.
This rate of unemployment has not been observed since September 2016, except for the period of elevated unemployment during the height of pandemic in 2020 and 2021, the report noted.
“People are facing greater difficulties finding work in the current labour market,” StatCan said, adding that the “average duration of unemployment has also been rising.”
The average time spent by unemployed individuals seeking work in May was 21.8 weeks, compared to 18.4 weeks in the same month last year, StatCan reported. Nearly 47 percent of individuals who were unemployed last month had either not been employed in the preceding 12 months or had never held a job, an increase from 40.7 percent in May 2024.
The increase in the unemployment rate was mainly caused by nearly stagnant employment growth, despite a rise in population. There were no mass layoffs in the past year to account for the change, StatCan noted. The layoff rate has held steady at 0.6 percent since last May.
There has been little growth in employment since January, following robust increases from October 2024 to January 2025, the report said, noting that the total employment figure rose by a modest 8,800 individuals.
A gain of 58,000 full-time positions was countered by a reduction of 49,000 part-time jobs.
The employment rate, defined as the percentage of individuals aged 15 and older who are employed, remained stable at 60.8 percent in May, aligning with a recent low recorded in October 2024.
Job Losses and Gains
The wholesale and retail trade sector led the way in May with the addition of 43,000 jobs after facing losses in April and March. Information, culture, and recreation also recorded increases in May, StatCan said.
Public administration saw a decline of 32,000 jobs in May, which led to losses across various industries, negating the gains linked to the federal election held April 28, the agency said. The accommodation and food services sector and the transportation and warehousing industry both lost jobs last month as well.
The manufacturing sector faced severe challenges in April, resulting in a loss of approximately 12,200 jobs in May.
Cities located in the manufacturing corridor of southwestern Ontario are currently experiencing an “uncertain economic climate” as automakers grapple with tariffs imposed on motor vehicles and their components, StatCan said.
Windsor, Oshawa and Toronto filled the top three spots of StatCan’s unemployment rate chart of the country’s 20 largest census metropolitan areas.
The Bank of Canada will scrutinize such labour market data carefully while seeking clues about how Canada’s tariff disagreement with the United States is affecting the economy.
The central bank held its benchmark interest rate steady for the second time in a row this week at 2.75 percent. Its next decision is set for July 30.
Student Employment
The summer employment landscape for students is shaping up to be more challenging than ever, StatCan said. Approximately 20 percent of students aged 15 to 24 who are returning to school in the fall were unemployed as of May.
StatCan reported that the unemployment rate for this demographic has increased each May since 2022, when slightly more than one in 10 returning students were without jobs in a comparatively competitive labour market.
The last time the student unemployment rate reached a level this elevated, excluding the pandemic years, was in May 2009.
The Canadian Press contributed to this report.
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