Good morning. This week, we’re watching whether Canada’s labour market is starting to steady, whether recession talk is getting ahead of the data, and why oil, AI and earnings are keeping markets on edge.

Trade: Doug Ford and billionaire businessman Ross Perot Jr. are co-hosting a reception in Washington, part of the Ontario Premier’s renewed efforts to push for stronger economic ties between Canada and the United States.

Energy: The Trans Mountain pipeline will run at full capacity this month, CEO says.

Tech: Google pundit backs Ottawa’s “AI for all” strategy ahead of government reveal.

Canada’s May jobs report on Friday will show whether the labour market is starting to steady after a weak start to the year.

Unemployment has edged higher and hiring has been weak, but economists expect the country added about 10,000 jobs in May and that the unemployment rate held at 6.9 per cent.

RBC is more optimistic, forecasting a gain of about 25,000 jobs, helped by temporary hiring for the federal census. The recent rise in unemployment has reflected weak hiring and longer job searches more than a broad wave of layoffs, which have been concentrated in trade-exposed sectors, economists Nathan Janzen and Claire Fan wrote.

“That is little comfort for those looking for work,” they said. “But it’s not the kind of labour market softening typically seen, for example, at the beginning of a recession.”

2. The beginning of a recession

Technically, perhaps. (Hey, who wants to help me write a new line of RomEconiComs? We will need to do better than the similarly titled Definitely, Maybe, which lacked “wit and sensitivity,” according to our critic.)

Statistics Canada reported at the end of last week that the country’s economic output shrank in the first quarter of 2026. That makes for two consecutive quarters of negative growth, which means Canada might have entered a “technical recession.”

But economists cautioned it may be premature to use that term. The first-quarter decline was a wee 0.1 per cent, and could easily be revised upward by Statscan, which routinely updates estimates as more complete data become available.

Still, the surprise slowdown handed political ammunition to critics of the federal government. Conservative Leader Pierre Poilievre sent a letter to Prime Minister Mark Carney yesterday demanding an emergency debate in Parliament on what he called the “Liberal recession,” Mark Rendell and Marieke Walsh report.

And in Ottawa today, Carolyn Rogers, senior deputy governor of the Bank of Canada, is appearing at a House of Commons hearing. The committee’s focus is on public accounts, such as how the central bank’s financial position impacts the federal ledger, but politicians are likely to use the new data – which undershot the bank’s projections of 1.5-per-cent growth – as a reason to ask broader questions about the central bank’s coming economic projections.

In its annual Financial Stability Report last week, the bank said Canada’s financial system has stood up to a period of economic uncertainty, but it could be tested by a combination of geopolitical conflict, changing U.S. trade policy and the spread of artificial intelligence.

3. Starts and stops

Ceasefire talks between Washington and Tehran to reopen the Strait of Hormuz continue to anchor the global market outlook. But diplomacy got more complicated after Israeli troops captured Beaufort castle on the weekend – marking their deepest incursion into southern Lebanon in more than a quarter-century and tossing a geopolitical wrench into U.S.-led talks with Iran.

A fresh surge in oil prices would only complicate the inflation picture just as attention turns to Washington for Friday’s critical U.S. jobs report. The non-farm payrolls data will serve as the high-stakes debut for newly appointed Fed Chair Kevin Warsh. Economists expect May hiring to cool to 96,000 jobs, with the unemployment rate tracking at 4.3 per cent. An upward surprise in hiring – compounded by renewed energy jitters –risks rattling a market already bruised by stubborn inflation and spiking bond yields.

4. Milking it

High-tech farming efficiencies, rising milk yields per cow and a massive boom in processing factories have triggered a flood of U.S. milk, dragging wholesale dairy prices to multiyear lows.

While cheap milk hurts Saputo’s top-line revenue growth, it provides a strawberry lining for profit margins by slashing raw input costs. Combined with Canada’s quota-protected domestic market, Saputo has a rock-solid floor of predictable profits.

But the Montreal-based company’s shares have turned choppy after a spectacular 85-per-cent rally from their 2025 lows, Amber Kanwar writes.

5. Quick hits

• Downward-facing dog: Lululemon enters Thursday’s earnings languishing at a multiyear low after an avalanche of drama – including a US$1-billion activist stake, a CEO departure, board warfare from founder Chip Wilson and product stumbles like the pulled “Get Low” pants – leaving analys