‘Zombie economy’: Liberals joyously celebrate unemployment rate of 6.6%

Canada added 88,000 jobs in May, the first significant gain since November 2025, after shedding 112,000 net jobs in the first four months of 2026. Unemployment fell from 6.9% to 6.6%. Though this comes as hosting the World Cup kicks off, so these numbers may be falsely inflated. The PBO slashed its growth forecast to 1.1% for 2026. Scotiabank says 0.8%. CIBC says 0.5%. Melissa Lantsman called Canada the only G20 country whose prime minister drove its economy into recession. Jim and Iain put it all together.

Topics covered:
► Statistics Canada's May 2026 Labour Force Survey released today: 88,000 jobs added, the first significant increase since November 2025, with unemployment falling from 6.9% to 6.6%, well above the economist forecast of 10,000 jobs and an unchanged rate, driven by 154,000 full-time job gains partially offset by 66,200 fewer part-time positions, led by construction at 27,000 but with wholesale and retail trade losing 35,000

► The context Jim and Iain apply: the economy shed 112,000 net jobs in the first four months of 2026, meaning May's gain reverses approximately 80% of 2026's losses, net employment for the year remains negative, and the gain does nothing to reverse the structural weakness in the economy

► Provincial breakdown: Ontario at 7% unemployment, Canada's manufacturing hub, Kelowna at 9%, Nanaimo at 8.5%, Chilliwack at 7.7%, Vancouver at 6.7%, with Alberta adding 14,000 of Canada's 88,000 jobs and Jim and Iain asking what Alberta and Saskatchewan could do without the regulatory shackles

► The PBO's economic and fiscal outlook slashing its 2026 growth forecast to 1.1% and 1.6% for 2027, with Scotiabank at 0.8% and CIBC at 0.5%, compared to US projected growth of 1.9%, with the PBO stating that the labour market has softened and businesses are postponing expansion plans

► Melissa Lantsman's House of Commons statement: Canada is the only G20 economy in recession, the only G20 prime minister to have driven his economy there, growth has declined in three of the last four quarters, 10 of 16 industry sectors declined in productivity, labour productivity has fallen in three of the four quarters since Carney took office, and these represent real jobs not created and real investments not made

► The international unemployment comparison Jim and Iain present: Canada at 6.6% while Mexico, Japan, South Korea, Poland, Israel, and Slovenia all post lower unemployment rates, with Israel specifically highlighted as fighting a war on multiple fronts with its cities being bombed and youth conscripted while its unemployment rate is lower and its GDP per capita recently surpassed Canada's

► The Bank of Canada rate hike warning: bond markets pricing in a 30 basis point hike after the May jobs number, with the PBO projecting the Bank holding at 2.75% through 2027, and Jim and Iain warning that hiking rates into a recession with inflation coming from energy prices is the textbook definition of stagflation, a scenario they have been predicting for months

► The Quebec comparison: unemployment at 5.6%, the best provincial result, the only province to receive a passing grade from Food Banks Canada, and the recipient of a $10 billion federal infrastructure deal this week, with Jim and Iain drawing the Scotland parallel and arguing every province is watching how Quebec gets results by fighting relentlessly for its people

Is one good jobs month in a context of negative net employment for 2026, 0.8% growth forecasts, and the only G20 recession actually good news?

Let us know what you think in the comments.

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