Canada's unemployment rate in May at almost nine-year high outside of COVID years

OTTAWA, Canada - Canada's unemployment rate in May jumped to its highest level in almost nine years outside of the pandemic era with 1.6 million jobless people in the country amid a constrained labor market, data showed on Friday.

The unemployment rate ticked up to 7% in May from 6.9% in April, a third consecutive monthly increase, Statistics Canada said, adding that the total jobless people in May were almost 14% higher than what was seen a year ago.

This was primarily driven by an almost flat employment growth amid a rising population, even though there were no major mass layoffs.

This level of unemployment was last seen in September 2016 after the COVID-era unemployment numbers of 2020 and 2021 are excluded, Statscan said.

"People are facing greater difficulties finding work in the current labor market," it said.

The total number of people employed saw meager addition of 8,800 people. The employment number has a standard error margin of 32,000.

Analysts polled by Reuters had forecast the unemployment rate to be at this level due to the impact of U.S. tariffs on Canada. They had estimated total employment number to drop by 12,500.

Trump imposed tariffs in March on a variety of Canadian products, followed by on steel and aluminum, and later in April on automobiles. These have already led to fewer job additions and some layoffs.

The Bank of Canada has said that the tariffs and the confusion over the scope and extent of them have created uncertainty that is hurting investments, hiring intentions and risking job losses, and this trend is likely to continue.

This was evident in the duration of unemployment which has been consistently rising with jobless people spending an average of 21.8 weeks searching for work last month, up from 18.4 weeks from a year ago.

The average hourly wage growth of permanent employees, a metric closely watched by the Canadian central bank to gauge inflationary trends, was unchanged at 3.5% in May.

The employment number was driven by increase in wholesale and retail trade and was offset by drop in manufacturing and government jobs by 2.5% reflecting the expiration of election-related temporary hiring. — Reuters