Insights 
VT 
In May 2025, Canada’s employment increased by 8.8K, outperforming the anticipated decline of 12.5K. The previous month’s figures showed an increase of 7.4K jobs.
The unemployment rate for May was 7.0%, aligning with expectations and showing a slight rise from the previous rate of 6.9%. Full-time employment rose by 57.7K, surpassing the prior increase of 31.5K, while part-time employment decreased by 48.8K compared to a prior decrease of 24.2K.
Participation Rate Remains Stable
The participation rate remained stable at 65.3%, matching the prior rate. Average hourly wages grew by 3.5%, consistent with prior figures.
Statistics Canada noted that since January, there has been minimal employment growth following strong gains from October 2024 to January 2025. Despite these figures, no policy changes from the Bank of Canada are anticipated, with a rate cut expected by year-end.
What we’ve seen emerge from this set of figures is a picture of relative resilience in the Canadian labour market, albeit restrained. Employment edged higher by 8,800 in May—an outcome that runs counter to market expectations for a contraction. That movement, alongside April’s also modest but positive change, speaks to an economy neither contracting rapidly nor charging forward, but holding its shape for now.
The uptick in full-time positions—specifically the 57,700 increase—does carry weight. Paired with a notable drop in part-time employment, it suggests a possible shift in hiring patterns favouring more permanent roles. That said, such a dynamic also hints about the type of labour being demanded, with employers potentially seeking more reliable, steady staff as opposed to flexible arrangements. It’s not a sudden change, but worth following.
Steady Wage Growth
Wage pressures, while steady, aren’t accelerating. The 3.5% year-on-year growth in hourly earnings continues a consistent trend. This creates fewer complications in the short term when anticipating price pressures flowing from the labour market. The figures don’t suggest new inflationary sparks from here.
Unemployment ticked up a tenth of a point to 7.0%, which, while marginal, still represents a continued softening in job market conditions. Not alarming in isolation, but when placed against the backdrop of flat participation and subdued overall hiring since January, it becomes part of a broader picture. The momentum visible toward the end of 2024 appears to have dissipated.
Policymakers have taken a predictable stance for now—no near-term adjustment to policy seems forthcoming, which we interpret as a response to the accumulation of data rather than any one monthly print. We’re still looking at rates likely moving lower, but not abruptly, and not until further confirmation arrives over the coming months.
For traders focused on rates exposure through derivative positioning, these figures offer a clearer boundary for expectations. With employment not faltering but also not accelerating, upward risks to tightening appear contained. That shifts our attention to interpreting forward wage signals, and central decisions being priced further out.
Market pricing has been sober in how it absorbed the update, suggesting that assumptions about monetary course remain intact. The job data hasn’t encouraged a rethink. Instead, it’s reinforced the likelihood of a cautious slide toward easier settings, assuming no surprises elsewhere. Therefore, positions sensitive to terminal rate views—especially front-end rate exposures—should lean into the evidence at hand, rather than speculative shocks.
We’re monitoring forward-looking commentary more intensely now because flat job growth over several months can begin to reframe policy communication well ahead of the actual press conferences or statement releases. And while the central bank hasn’t changed its posture, it’s aware of the signal being sent by continued modest gains, even with sharper movement within full- and part-time components. How that filters into yield curves from a valuation perspective needs precise watching.
From a strategy view, maintaining exposure aligned with a gradual easing cycle appears better supported now. Short-term instruments may reflect rates peaking already, with risk premium potentially compressing further if labour keeps underwhelming relative to the brisk pace seen late last year.
