Pause, Pivot, or Plateau? What May’s Labour Numbers Tell Us About What’s Next

Canada’s job market in May did not shift significantly, but that, in itself, tells a story. With only a marginal net gain of 8,800 jobs and the employment rate holding steady at 60.8%, the labour market is signaling a period of cautious balance: not decline, but not forward momentum either.

The number of employees in the private sector rose by 61,000, the first increase since January, while public sector jobs fell by 32,000 as temporary election workers were released. Growth in full-time roles (+58,000) was largely matched by a drop in part-time positions (–49,000).

Underlying this steady headline, however, is a subtle but important shift in the nature of work itself. Many of the roles emerging today are contract positions, with a growing number of Canadians working as independent contractors or incorporated professionals rather than traditional full-time employees.

What’s striking is not what changed dramatically, but what didn’t. After the hiring momentum seen late in 2024, employment growth has plateaued since January, even as economic uncertainty, regional pressures, and global headwinds persist

Momentum on the Coasts

The regional picture was nuanced. Three provinces posted meaningful gains:

• British Columbia added 13,000 jobs, with its unemployment rate holding at 6.4%. Notably, Victoria posted the lowest big-city unemployment in Canada (3.7%).
• Nova Scotia saw a 2.1% increase in employment, lowering its unemployment rate to 6.5%.
• New Brunswick grew by 1.9%, with unemployment dipping to 6.3%.

In contrast, Quebec lost 17,000 jobs and Prince Edward Island saw a sharp percentage decline (a drop of 2.9%), while Manitoba also posted losses. Ontario’s labour market was essentially flat, but some cities—Windsor (10.8%), Oshawa (9.1%), and Toronto (8.8%), are showing signs of strain. This is likely tied to ongoing uncertainty in the manufacturing and auto export sectors.

Industry Outlook

Industry performance tells a story of rebalancing. Some sectors saw renewed hiring:

• Wholesale and retail trade led the gains, adding 43,000 jobs, driven largely by wholesale.
• Information, culture and recreation added 19,000 jobs.
• Finance, insurance, real estate, and leasing continued a multi-month climb.

On the other hand, public administration fell by 32,000 jobs. This was an expected reversal after a temporary bump from federal election hiring. Declines also hit transportation and warehousing, accommodation and food services, and business support services, each down by about 15,000 to 16,000 jobs.

This suggests a labour market adjusting to post-election normalization and responding to slower consumer demand in some segments.

Work is Changing: The Rise of Contract and Independent Employment

These broader labour shifts are reflected most clearly in the structure of new work opportunities, especially in sectors like tech.

As companies seek greater flexibility and cost control in an uncertain economy, contract-based, project-driven employment models are becoming the new normal. This trend is especially pronounced in IT, where most of the current hiring activity is for contract roles rather than traditional permanent jobs.

Across Canada's tech hubs, Toronto, Vancouver, Montreal, this transformation is reshaping how the workforce operates. The demand for skills in software, cybersecurity, AI, and data infrastructure remains high, but the way those roles are filled is evolving:

• Employers want scalability and cost control in an uncertain economy.
• Tech work often fits better with project-based timelines than permanent staffing.
• Professionals are seeking flexibility and autonomy, choosing contracts over salaried roles.

This shift marks a move toward a skills-first, structure-second labour economy. Titles matter less; capability, deliverability, and adaptability matter more. Emerging areas like AI ethics, quantum computing, and cybersecurity resilience are especially reliant on specialized, agile talent pools.

The Other Side of the Coin

Wage growth remained healthy at 3.4% year-over-year, with average hourly earnings reaching $36.14. While this doesn’t outpace inflation dramatically, it reflects a steady labour demand backdrop.

Unemployment rose slightly to 7.0%, its highest level since 2016 outside of pandemic years. This is a signal of loosening in the market. Notably, the share of unemployed workers who have been out of the workforce for a year or more is rising, and job-finding rates have dipped compared to both last year and pre-pandemic norms.

Looking Ahead

May’s numbers show a market in pause, not regressing, but recalibrating. For employers and job seekers, it's a reminder that agility, adaptability, and skills-first thinking are becoming critical currency in the new world of work

For policymakers, this is a moment to pay close attention. For job seekers and employers alike, it’s a reminder that while conditions aren’t worsening rapidly, competition is stiffer and flexibility may be more important than ever.