Canada's Labor Market Faces Challenges Amid Economic Slowdown

Market expectations indicate that Canada's employment figures for May, released on Friday, are anticipated to show a modest increase of 10,000 jobs, with the unemployment rate remaining steady at 6.9%. According to Jin10, Scotiabank reported that Canada's labor market has been weak this year, with net employment declining in three of the first four months, resulting in a cumulative loss of over 100,000 jobs by April. Meanwhile, the Canadian economy has entered a technical recession, with GDP contracting at an annualized rate of 0.1% in the first quarter of 2026. However, the bank noted that this GDP decline was largely due to a significant increase in imports, while household consumption continued to grow, indicating that domestic demand has not significantly deteriorated. Despite this, the bank believes that persistent weak employment data, coupled with trade policy uncertainty and ongoing geopolitical risks, are expected to keep the Bank of Canada in a wait-and-see stance. The market widely expects that under the leadership of Bank of Canada Governor Tiff Macklem, the central bank will maintain the overnight rate unchanged for at least the next few policy meetings, refraining from adjusting the monetary policy direction.