In May 2025, Canada’s job market saw an increase of 8,800 jobs, which was better than the expected drop of 12,500. In April, there was an increase of 7,400 jobs. The unemployment rate in May was 7.0%, meeting expectations and slightly rising from 6.9% in April. Full-time jobs rose by 57,700, much higher than the previous increase of 31,500. However, part-time jobs fell by 48,800, compared to a prior decline of 24,200. The participation rate stayed the same at 65.3%, consistent with previous numbers. Average hourly wages grew by 3.5%, in line with earlier trends. According to Statistics Canada, employment growth has been limited since January, after strong increases from October 2024 to January 2025. Despite these changes, the Bank of Canada is not expected to change its policies and may cut rates by the end of the year. These numbers reveal a resilient, though restrained, Canadian labor market. The 8,800 job increase in May defied expectations for a decline. Coupled with a modest gain in April, this suggests the economy is stable, neither rapidly shrinking nor growing. The rise in full-time jobs—specifically the 57,700 increase—holds significance. The corresponding drop in part-time jobs hints at a potential shift toward more permanent positions. This may indicate that employers are looking for more reliable staff rather than flexible workers. While this change isn’t dramatic, it’s worth noting. Wage growth remains steady at 3.5% year-over-year. This stability helps limit potential short-term price increases linked to the labor market, indicating no new inflation concerns arise from these figures. The unemployment rate rose slightly by 0.1% to 7.0%. While this increase is minor, it still shows a trend of weakening job market conditions. This isn’t alarming by itself, but combined with stagnant participation and slow hiring since January, it paints a broader picture. The growth seen late in 2024 seems to have faded. Policymakers are likely to maintain their current approach, with no immediate changes expected to policy. This response appears to be based on the accumulation of data rather than one monthly report. We still anticipate a gradual rate decrease, but not until we see more confirmation in the coming months. For traders focused on interest rates, these figures clarify expectations. Employment isn’t falling, but it’s not rising quickly either, which keeps the risks related to tightening under control. This shifts the focus to interpreting wage trends and future decisions about rates. The market has reacted cautiously to this update, indicating that current expectations for monetary policy remain unchanged. The job data hasn’t prompted a change in outlook; rather, it supports the likelihood of a careful shift toward easier policies unless other surprises arise. Thus, positions sensitive to terminal rate expectations—especially those with short-term rate exposure—should base their strategies on the current evidence instead of speculation. We are especially attentive to forward-looking comments now, as flat job growth over several months may influence policy talks before any official announcements. Although the central bank hasn’t changed its stance, it recognizes the signal sent by ongoing modest gains, even with larger fluctuations in full-time and part-time work. How this affects yield curves in terms of valuation will need careful tracking. From a strategy perspective, maintaining exposure in line with a slow easing cycle seems well-supported now. Short-term instruments might already reflect peak rates, with risk premiums possibly narrowing further if employment continues to underperform compared to the rapid growth seen last year.

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