Canada's blockbuster May jobs report wipes away recession fears, says CPA Canada's chief economist
Canada's labour market staged a dramatic turnaround in May, adding 88,000 jobs and pulling the unemployment rate down to 6.6%, a result that prompted CPA Canada's chief economist to declare the country's recession debate effectively over.
Statistics Canada's Labour Force Survey, released June 5, showed the first significant employment gain since November 2025. The surge erased nearly 80% of the 112,000 net jobs lost during the first four months of the year and landed well above the 10,000-job gain analysts had forecast.
"This is a blockbuster report that seemingly wipes away recession fears and points to a rebound in the second quarter following two quarters of contraction," said David-Alexandre Brassard, chief economist at CPA Canada.
"May job numbers significantly beat expectations, bringing employment close to flat for 2026. The scale of job creation – particularly in full-time roles – points to improving economic conditions rather than a downturn."
Full-time employment drove the recovery, rising by 154,000 in May, fully reversing net losses recorded from January to April in that category. Part-time employment fell by 66,200.
The employment rate climbed 0.2 percentage points to 60.7%. Average hourly wage growth eased to 3.2%, down from 4.8% the prior month, signalling a loosening of labour market tightness.
Read more: Canada's labour market bounces back, likely taking BoC cut off the table
A stronger hand heading into CUSMA
Brassard pointed to the report's broader strategic value as Canada prepares for negotiations on the renewal of the Canada-United States-Mexico Agreement (CUSMA).
"That resilience comes as Canada looks ahead to the renewal of CUSMA," he said.
"We're in a stronger position heading into these discussions, which is extremely important given ongoing global trade pressures."
Construction (+27,000), information, culture and recreation (+19,000), and transportation and warehousing (+19,000) led sector gains, industries with relatively limited direct exposure to tariff pressure.
The Bank of Canada previously urged calm ahead of this report. "Two quarters of annualized contraction in GDP does meet one definition of a recession. But simply the fact that you have to put the term 'technical' in front of it sort of tells you that you need to really look past that one indicator," said senior deputy governor Carolyn Rogers.
Mike Carney says proposed US tariffs are not unexpected, but economists warn they could still impact inflation, rates, and housing demand.https://t.co/9wq9IGlsJQ
— Canadian Mortgage Professional Magazine (@CMPmagazine) June 5, 2026
What the data means for brokers
According to the Ownright Operators Report, which surveyed 1,015 real estate professionals across Canada between March 27 and April 29, 40% of respondents cited economic anxiety, including recession fears, as the primary reason buyers and sellers were holding back.
Two in five brokers identified recession fear as a top deal killer in 2026, a sentiment today's numbers may begin to unwind.
Toronto mortgage broker Drew Donaldson, who previously spoke to Canadian Mortgage Professional about the housing market outlook amid economic volatility, has noted that easing conditions could ultimately improve the picture for qualified buyers.
The Bank of Canada announces its next rate decision on June 10, with May's labour data now folded into its deliberations.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
