May jobs data: south heads north while north goes south

Jobs data for May, released in Washington and Ottawa this morning, reveal sharp differences in the way the US and Canadian economies are coping with the current phase of the COVID pandemic. While the US data should have alleviated concern that the recovery is slowing, for Canada the numbers are further evidence that the second quarter of the year will. see no real growth, or even a slight contraction. 

The Bureau of Labor Statistics reported that the US economy added 559,000 jobs in May, dropping the unemployment rate to 5.8 percent. While this fell short of market expectations for a rise of 650,000, it should be noted that both the March and April figures were revised higher, by a total of 27,000. Total employment in the US remains some 7.6 million below its pre-pandemic peak (February 2020), but the report suggests that a more "normal" level of employment will be achieved in the next few months, particularly since employers in many parts of the country are reporting difficulties in finding the staff they need. 

The picture in Canada is starkly different. According to Statistics Canada, the economy lost 68,000 jobs in May, in the wake of the loss of 207,000 jobs in April. The unemployment rate was little changed at 8.2 percent. Almost all of the jobs lost in May were part-time, reflecting the outsized impact of pandemic restrictions on sectors such as retail, although StatsCan notes that employment in the goods-producing sector also fell in the month, the first time this has happened since April 2020. While public sector employment has risen during the pandemic, the number of people employed in the private sector now stands 564.000 below the peak seen in February 2020.

StatsCan places the blame for the weak employment data for the past two months entirely on the latest round of COVID-related restrictions, which were in full force across the country for virtually the entire month of May. While these restrictions are starting to ease as COVID cases decline,  there will be no significant reopening in the most populous Province, Ontario, until mid-June, meaning that the restrictions will be in place during the week that StatsCan conducts its survey. This points to another flat jobs report for the month, at best, but this could set the stage for very strong job gains across the country in the third quarter of the year.