P.E.I. unemployment rate dropped to 9.3 per cent in May from 11.2 per cent.
The province also added 800 jobs for the month.
The Canadian economy lost 7,500 jobs in May as a drop in full-time employment was only partially offset by an increase in part-time jobs, Statistics Canada said Friday.
The agency reported the dip as the unemployment rate held steady at 5.8 per cent for the fourth consecutive month.
The overall drop in the number of jobs came as full-time jobs fell by 31,000, offset in part by a gain of 23,600 part-time positions.
The loss of jobs came as the health care and social assistance sector lost 24,000 jobs, while the manufacturing sector lost 18,000. Employment in construction fell 13,000.
Sectors gaining jobs included the accommodation and food services sector which added 18,000 jobs, helped by growth in British Columbia. The professional, scientific and technical services sector added 17,000 an transportation and warehousing added 12,000.
Meanwhile, average hourly wages, a key indicator watched by the Bank of Canada, increased 3.9 per cent compared with a year ago, the monthly reading's largest annual increase since April 2009.
Employment in B.C. fell by 12,000 for the month.
In Quebec, a drop in full-time work was offset by a gain in part-time to leave the province little changed for the month. Statistics Canada says there was virtually no change in the number of people working in Ontario.
On a year-over-year basis, overall employment was up by 238,000 jobs or 1.3 per cent, due to gains in full-time work.