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Canada's labor market delivered a much stronger-than-expected performance in May, with employment rising by 87.8k compared with expectations for a gain of just 10.2k. The increase marked the first significant monthly advance since November 2025 and followed a decline of -17.7k in April. While the result does not fully offset the weakness seen earlier this year, it represents a notable turnaround after cumulative job losses of -112k during the first four months of 2026.

The quality of hiring was particularly encouraging. Full-time employment surged by 154k, highlighting solid underlying labor demand rather than temporary or part-time hiring. As a result, the unemployment rate fell from 6.9% to 6.6%, beating expectations for an unchanged reading. The employment rate also improved by 0.2 percentage points to 60.7%, indicating broader labor-market participation and stronger workforce absorption.

Despite the sharp rebound in hiring, wage growth eased noticeably. Average hourly earnings increased 3.0% yoy in May, slowing from 4.5% yoy in April. That moderation should help alleviate concerns about wage-driven inflation pressures and may reduce any urgency for the Bank of Canada to consider tighter policy.

Full Canada employment release here.

US labor market resilience was on full display in May as non-farm payrolls rose 172k, nearly double market expectations of around 85k. The report was further strengthened by a sizable upward revision to April's payroll gain from 115k to 179k, indicating that hiring momentum was considerably firmer than previously thought.

The unemployment rate held steady at 4.3%, while the participation rate was unchanged at 61.8%, suggesting labor-market conditions remain broadly stable despite growing concerns about slowing economic growth.

Wage data were largely in line with expectations. Average hourly earnings rose 0.3% mom after 0.2% in April, while annual wage growth slowed from 3.6% yoy to 3.4% yoy.

The moderation in yearly wage growth may ease some concerns about a wage-price spiral, but the combination of strong hiring, stable unemployment, and still-solid wage gains is unlikely to alter the Fed's broadly hawkish stance.

*April revised from 115k to 179k

Full US NFP release here.

The Eurozone economy contracted in the first quarter of 2026. GDP fell by -0.2% qoq, reversing the 0.2% expansion recorded in the previous quarter, while annual growth slowed sharply to 0.3% yoy from 1.2% yoy. Across the broader EU, GDP declined by -0.1% qoq, with annual growth easing to 0.7% from 1.4%.

The details suggest that domestic demand remained relatively resilient but was not strong enough to offset weakness elsewhere. Household consumption and government spending each contributed 0.1 percentage point to growth in both the Eurozone and EU, indicating that consumers and the public sector continued to provide modest support despite a challenging economic environment.

However, investment activity weakened, with gross fixed capital formation subtracting -0.1 percentage point from growth. Inventories also dragged on Eurozone GDP, while the largest negative contribution came from trade. Net exports reduced growth by -0.3 percentage point in the Eurozone and -0.2 percentage point in the EU, underscoring the impact of softer external demand and a sluggish global trade backdrop.

Performance across member states was highly uneven. Denmark led growth with a 1.9% quarterly expansion, followed by Estonia and Malta at 1.1%. At the other end of the spectrum, Ireland posted a sharp 12.1% contraction, while Lithuania, Sweden, and France also recorded declines.

The broad picture is one of a Eurozone economy losing momentum just as inflation remains elevated, complicating the ECB's task and reinforcing concerns about a stagflationary environment.

Full Eurozone GDP release here.