Canada’s economy added 87,800 jobs in May and the unemployment rate fell to 6.6%, defying widespread expectations. Analysts had forecast just 10,000 job additions and expected the unemployment rate to hold at 6.9%.

The gains were concentrated in full-time work, which saw a net addition of 154,000 positions, reversing a string of part-time-heavy or negative months.

Construction; information, culture and recreation; accommodation and food services; and manufacturing led the gains. Both the private and public sectors added jobs over the month.

Average hourly wages for permanent employees rose 3.2% year over year, slowing from 4.8% in the prior month.

While the overall results are encouraging, Canada had lost 112,000 net jobs in the first four months of 2026, meaning May’s gains erased much of those losses.

The Bank of Canada makes its next interest rate announcement on June 10, and this stronger-than-expected jobs report adds another variable to a decision already complicated by a technical recession and rising inflationary pressures in Canada.

The U.S. economy added 172,000 jobs in May, well above analysts’ estimate of 88,000. The unemployment rate held steady at 4.3%.

Job gains were led by leisure and hospitality with 70,000 new positions, followed by local government at 55,000 and health care at 35,000. Manufacturing added a modest 7,000 jobs.

Average hourly earnings rose 0.3% over the month and were up 3.4% over the past year, both in line with expectations.

May marked the third consecutive month of consensus-beating job gains, reinforcing the U.S. Federal Reserve Board’s (Fed’s) focus on inflation rather than the labour market as its primary policy concern.

With the labour market holding firm and inflation still running high, the Fed faces a difficult balancing act as the prospect of an interest-rate cut may be moving further away, not closer.

Europe’s annual inflation rate rose to 3.2% in May from 3.0% in April, according to a flash estimate from Eurostat.

Energy costs were the biggest driver, surging 10.9%, the steepest rise since February 2023. The rise was fuelled by supply constraints tied to the Middle East conflict.

Core inflation, which strips out food and energy, rose by 0.3 percentage points to 2.5%, exceeding analyst expectations and reaching its highest level in over a year.

Consumer price growth in the eurozone has now exceeded the European Central Bank’s (ECB’s) 2% target for the third consecutive month, raising expectations among economists that the ECB may increase interest rates at its June 11 meeting.

China’s official NBS Manufacturing Purchasing Managers Index (PMI) slipped to 50.0 in May from 50.3 in April, sitting right at the threshold that separates expansion from contraction.

New orders fell below the threshold to 49.9, while the production index held above it at 51.2, meaning factories kept output growing even as demand softened.

Export orders declined sharply, falling to 48.6 from 50.3 in April, with analysts pointing to a pullback in consumer goods exports as a key factor.

Manufacturers continued to face pressure from weak domestic demand and higher input costs tied to the Middle East conflict. Employment also remained soft, suggesting the broader economic recovery in China is still on uncertain footing.