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

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Last Updated On 6 June 2025, 1:14 PM EDT (Toronto Time)

Unemployment in Canada rose to 7% in May 2025, marking the highest rate since 2016, as the job market showed little growth with only 8,800 jobs added.

According to Statistics Canada’s Labour Force Survey released on June 6, 2025, the economy added a modest 8,800 jobs, reflecting a 0.0% monthly change.

This stagnation follows a period of robust job growth from October 2024 to January 2025, raising concerns about economic momentum as challenges like tariffs and a tough summer job market for students emerge.

Below, we dive into the key findings, industry trends, regional variations, and their broader implications for Canada’s economy.

In May 2025, Canada’s employment level stood at 20,978,000, virtually unchanged from the previous month (+8,800 jobs).

The employment rate—the proportion of the population aged 15 and older who are employed—held steady at 60.8%, matching a recent low from October 2024.

This lack of growth marks the second consecutive month of stagnant employment, a sharp contrast to the 211,000 jobs added between October 2024 and January 2025.

The modest job gains in May were driven by a 58,000 increase in full-time employment, offset by a 49,000 decline in part-time work.

This shift suggests a mixed labour market where full-time opportunities are emerging, but part-time jobs are contracting, potentially impacting workers seeking flexible hours.

The unemployment rate rose by 0.1 percentage points to 7.0% in May, continuing a three-month upward trend that has seen a 0.4-point increase since February.

This is the highest rate since September 2016, excluding the pandemic years of 2020 and 2021.

The number of unemployed individuals reached 1.6 million, up 13.8% (+191,000) from May 2024, signaling growing challenges in finding work.

The data also highlights longer unemployment durations.

In May 2025, the average time spent searching for a job was 21.8 weeks, up from 18.4 weeks a year earlier.

Nearly half (46.5%) of the unemployed had not worked in the past 12 months or had never worked, compared to 40.7% in May 2024.

This trend points to a labour market where job seekers face increasing difficulties transitioning into employment.

Employment changes in May varied significantly across industries, reflecting both growth and contraction in key sectors.

Industries with Job Gains

Wholesale and Retail Trade: This sector led growth with a 43,000-job increase (+1.5%), rebounding from losses of 55,000 jobs in March and April 2025.

The gains were primarily in wholesale trade, indicating a recovery in demand for goods and services.

Information, Culture, and Recreation: Employment rose by 19,000 (+2.3%), suggesting a boost in sectors like media, arts, and entertainment, possibly tied to seasonal or event-driven activities.

Finance, Insurance, Real Estate, Rental, and Leasing: This sector added 12,000 jobs (+0.8%), continuing an upward trend with a net gain of 79,000 jobs (+5.6%) since October 2024.

Utilities: A smaller but notable increase of 4,900 jobs (+3.1%) reflects stability in essential services.

Industries with Job Losses

Public Administration: The sector saw a significant decline of 32,000 jobs (-2.5%), offsetting April’s gains tied to temporary hiring for the federal election.

This drop suggests a return to baseline employment levels in the sector.

Accommodation and Food Services: A loss of 16,000 jobs (-1.4%) highlights ongoing challenges in hospitality, likely affecting part-time and youth workers.

Transportation and Warehousing: This sector shed 16,000 jobs (-1.4%), potentially reflecting disruptions like tariffs impacting trade and logistics.

Business, Building, and Other Support Services: A decline of 15,000 jobs (-2.1%) indicates reduced demand for administrative and support roles.

These shifts underscore a labour market with uneven recovery, where consumer-driven sectors like retail are rebounding, but public and service-oriented industries face headwinds.

Employment trends varied across provinces, with some regions showing resilience while others experienced declines.

British Columbia: Employment rose by 13,000 (+0.4%), with the unemployment rate steady at 6.4%.

Victoria recorded the lowest unemployment rate among Canada’s 20 largest census metropolitan areas (CMAs) at 3.7%, while Vancouver’s rate matched the provincial average at 6.4%.

Nova Scotia: A strong increase of 11,000 jobs (+2.1%) was accompanied by a 0.7-point drop in the rate to 6.5%.

New Brunswick: Employment grew by 7,600 (+1.9%), with the unemployment rate falling 0.6 points to 6.3%.

Quebec: Employment fell by 17,000 (-0.4%), offsetting April’s gains. The unemployment rate remained steady at 5.8%.

Manitoba: A decline of 5,800 jobs (-0.8%) reflects regional challenges.

Prince Edward Island: Employment dropped by 2,700 (-2.9%), signaling a significant contraction in the small province.

Ontario: Employment was unchanged, but the unemployment rate stood at 7.9%, with high rates in Windsor (10.8%), Oshawa (9.1%), and Toronto (8.8%).

These cities, part of Southern Ontario’s manufacturing corridor, face economic uncertainty due to tariffs on motor vehicle and parts exports.

The Labour Force Survey provides detailed insights into employment trends by age and gender, revealing divergent outcomes.

Core-Aged Workers (25–54 Years)

Women: Employment among core-aged women rose by 42,000 (+0.6%), partially offsetting a 60,000-job decline in April.

The employment rate increased by 0.5 points to 80.1%, reflecting resilience in this group.

Men: Employment fell by 31,000 (-0.4%), with the employment rate dropping 0.5 points to 86.0%, the lowest since August 2018 (excluding pandemic years).

The unemployment rate for core-aged men rose by 0.4 points to 6.2%.

Youth (15–24 Years)

Youth employment remained unchanged for the fourth consecutive month, with an employment rate of 54.1%, down 1.1 points from May 2024.

The unemployment rate for youth was 14.2%, highlighting persistent challenges in the job market.

Older Workers (55+ Years)

Employment for those aged 55 and older was stable, with no significant changes month-over-month or year-over-year.

May marks the start of the summer job season for students, a critical period for gaining work experience and income.

However, the Labour Force Survey indicates a challenging environment for returning students aged 15–24 (those attending school full-time in March and planning to return in the fall).

Unemployment Rate: The unemployment rate for returning students was 20.1% in May 2025, up 3.2 points from May 2024.

This is comparable to rates seen in May 2009 (20.0%) and May 1999 (20.1%), outside the pandemic years.

Gender Breakdown: Young men faced a 22.1% unemployment rate (+4.1 points year-over-year), while young women saw an 18.4% rate (+2.3 points).

Key Industries: Most employed returning students worked in retail trade (28.8%), accommodation and food services (20.5%), and information, culture, and recreation (13.1%).

However, accommodation and food services saw a significant 22.1% (-66,000) drop in student employment year-over-year.

Common occupations for returning students included retail salespersons, food counter attendants, cashiers, and program leaders in recreation and fitness.

For non-returning students aged 15–24, the unemployment rate was 12.2%, up slightly from 11.6% in May 2024.

Average hourly wages rose by 3.4% (+$1.20 to $36.14) year-over-year in May, matching April’s growth rate.

Total hours worked remained unchanged month-over-month but increased by 0.9% compared to May 2024, suggesting steady labour demand in some sectors.

Canada’s labour market in May 2025 reflects a complex picture of stagnation, with modest job gains offset by rising unemployment and regional disparities.

While sectors like wholesale and retail trade show resilience, declines in public administration and hospitality signal challenges.

The high unemployment rate for students and persistent difficulties for job seekers underscore the need for strategic measures to boost employment.

As the Bank of Canada and policymakers navigate these trends, the coming months will be critical for addressing economic uncertainties and fostering job growth.

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Purnima Mann

Purnima Mann, a news writer passionate about delivering insightful and well-researched articles. From current affairs to finance and culture , I aim to inform, engage, and spark meaningful discussions. Stay informed and explore new perspectives with me.