Viewpoint: US (and Canada) employment data — blowout data on both sides of the border

US (and Canada) employment data — blowout data on both sides of the border

U.S. nonfarm payrolls¹ surged by 172,000 to more than double consensus expectations in May (markets were looking for +88,000) in May, building off of April’s notably better-than-anticipated gain in employment (which was revised higher to +179,000 from the initially reported gain of +115,000; March was also revised up to +214,000 from +185,000) to suggest that the underlying American economy remains on solid footing despite the well-documented headwinds as we approach midpoint of the year – and reducing the prospects of rate cuts on the horizon (a full 25bps hike is now priced in by year-end as per U.S. Federal Reserve (Fed), Fed funds futures post-data), which is putting upward pressure on market yields and in turn weighing on equities ahead of the North American open.

Gains were again fairly broad-based across sectors: While finance (-22,000), information (-1,000) and retail & wholesale trade (-5,000) saw reductions in employment headcounts, all other areas notched gains and the one-month diffusion index (a measure of the share of firms adding to headcounts) touched its highest level since November at 54.4%, indicating a wide breadth of increases. That said, leisure & hospitality (+70,000; a positive sign for discretionary spending) and healthcare (+47,000; an ongoing theme) accounted for the vast majority of the gains, with more moderate increases registered elsewhere.

Private sector nonfarm employment by industry, U.S.
(month-over-month change in thousands)

Source: Guardian Capital LP, based on data from U.S. Bureau of Labor Statistics to May 2026

The unemployment rate held steady at 4.3% (consistent with expectations), as the 149,000 employment increase, as per the household survey², was effectively matched by a rise in the number of people looking for work; however, the broader “underemployment” rate, which incorporates people who are working part-time but want full-time, ticked down to 8.1% from April’s four-month high of 8.2%. Both measures of job market slack are up from their post-pandemic lows, but remain low from a historical standpoint and are not really showing much by way of materially softening market conditions.

Unemployment rates, U.S.
(percent)

Shaded regions represent periods of US recession; source: Guardian Capital LP, based on data from U.S. Bureau of Labor Statistics to May 2026

With that said, wage pressures have continued to moderate to more “normal” levels. The 0.3% month-over-month increase is effectively in line with the average over the last two decades, and the 3.4% year-over-year rate of increase in the average hourly wage rate matches March for a five-year low – the 2.8% 3-month annualized run rate is an 11-month low, providing at least some fodder for the more dovish policymakers at the Fed.

Average hourly wage rate, U.S.
(percent)

Shaded regions represent periods of U.S. recession; source: Guardian Capital LP, based on data from U.S. Bureau of Labor Statistics to May 2026

The bottom line is that it is a pretty solid set of employment data, suggesting that the American job market remains on firm footing, which could continue to provide significant support to consumers and spending in the face of energy-induced cost-of-living pressures. I continue to believe that there is limited appetite for the Fed and its new leadership to tighten policy any time soon, but continued indications of a healthy underlying economy in the face of broader price pressures definitely increase the prospect of the U.S. central bank’s rhetoric leaning more hawkishly going forward.

CANADA

Turning quickly to the North, the highly volatile Canadian Labour Force Survey³ released today provided a substantial upside surprise with employment rising by 87,800 in May, the biggest monthly increase since December 2024 and way ahead of the consensus call for a gain of 10,000.

The details of the report were generally upbeat. All the job gains were in full-time positions (+154,000; more tenuous part-time employment declined by 66,200) and predominantly focused in the private sector (+56,300; public sector added 20,400, while the ranks of the self-employed rose by 11,200). Increases were seen fairly broadly across sectors, led by construction (+27,000), information, culture & recreation (+19,000), trade-sensitive transportation & warehousing (+19,000) and accommodation & food services (+17,000), while headcounts dropped sharply in wholesale & retail trade (-35,000).

Change in total payrolls, Canada
(month-over-month change, thousands)

Source: Guardian Capital LP, based on data from Statistics Canada to May 2026

Other details of note are that the unemployment rate dipped to a four-month low of 6.6% from 6.9% in April, while the 12-month increase in the wage rate for permanent employees slowed sharply to 3.2% from 4.8% in the prior month.

Overall, it was a strong report – however, given the volatile nature of these reports and the fact that this follows softness (overall employment is down year-to-date even incorporating today’s bounce) and less-than-stellar signals on domestic data more broadly, it is unlikely to have a material impact on near-term decisions at the Bank of Canada (though markets clearly are putting a little more weight on the prospect of hikes before the year is out).

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David Onyett-Jeffries
David Onyett-Jeffries is Vice President, Economics & Multi Asset Solutions, at Guardian Capital LP (GCLP). He provides macroeconomic guidance to GCLP and its affiliates. Additionally, he is a portfolio manager of GCLP’s multi-asset portfolios and funds and works closely with GCLP’s Directed Outcomes team.

¹ U.S. Bureau of Labor Statistics, Economic News Release, Employment Situation Summary, The Employment Situation – May 2026, June 5, 2026, https://www.bls.gov/news.release/empsit.nr0.htm
² U.S. Bureau of Labor Statistics, Economic News Release, Employment Situation Summary Table A. Household data, seasonally adjusted, June 5, 2026, https://www.bls.gov/news.release/empsit.a.htm
³ Government of Canada, Statistics Canada, The Daily, Labour Force Survey, May 2026, June 5, 2026, https://www150.statcan.gc.ca/n1/daily-quotidien/260605/dq260605a-eng.htm

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Published: June 5, 2026