Canada's Unemployment Spike: Economic Challenges Revealed

In May, Canada's unemployment rate reached its highest in nearly nine years, excluding the peaks during the COVID-19 pandemic. Statistics Canada reported that 1.6 million Canadians were without jobs, as the unemployment rate climbed to 7% from April's 6.9%, continuing a three-month upward trend. Compared to last year, this marks a 14% increase in joblessness.

The modest employment growth, coupled with a rising population, led to the absence of mass layoffs. Statscan indicates that this precarious unemployment level echoes the figures from September 2016 when excluding pandemic-era numbers. Despite slight employment growth of 8,800 jobs, wider economic strains are evident.

Economists, including those polled by Reuters, predicted this rise due to U.S. tariffs on Canadian products, exacerbating the labor market's difficulties. Consequently, the Canadian dollar experienced a minor appreciation, while bond yields rose slightly. However, the contentious tariffs have deterred investments and hiring, as stated by the Bank of Canada, prolonging unemployment durations and impacting the economy's stability.

(With inputs from agencies.)