Analysis: Canada's May hiring largely reversed the earlier weak trend.

The Canadian labor market showed a strong rebound in job creation in May, with growth across all industries and all full-time positions. Royce Mendes of CIBC Capital Markets said that this rebound largely reversed the job losses seen earlier in the year, with current employment levels only slightly below the peak in December 2025. He noted that yields on the Canadian government bond yield curve are rising, with short-term yields leading the way, and traders currently expect one to two rate hikes for the remainder of the year. "Given the volatility of labor surveys, it is difficult to have too much confidence in the signaling ability of today's data," Mendes said, adding that he still sees downside risks to the Canadian economy due to weak fundamentals and trade negotiations.