Canada jobs data: mostly good

Canada's economy added 231,000 jobs in June, according to data released today by Statistics Canada, largely reversing the loss of 275,000 jobs over the previous two months.  This was above market expectations and, let it be said, higher than predicted in this blog.  The unemployment rate fell to 7.8 percent. Behind the headline numbers, however, details of the report can best be described as mixed. 

Part-time employment more than accounted for the rise in overall employment, posting a gain of 264,000. Full-time employment actually edged lower in the month and remains 2.2 percent below its pre-pandemic peak. Predictably, the majority of the jobs added were in the hospitality and retail sectors, as COVID restrictions were gradually lifted across the country. It is worth noting that even though StatsCan's survey was taken before a significant lifting of restrictions in Ontario, that Province led the way in job gains, with 117,000. 

Among the positives in the report, private sector employment rose 251,000 in the month after falling in both April and May.  The number of people working from home fell by 400,000 or about 8 percent in the month. The degree of labour force underutilization declined, as shown by falls in the number of people working short hours and the number not counted in the labour force but seeking work. Despite this, underutilization remains well above its pre-pandemic level.  Lastly, the labour force participation rate rose 0.6 percent to 65.2 percent, suggesting improved confidence in the employment situation.  

Continuing relaxation of COVID restrictions points to further strong job gains in July and August, with the emphasis likely to remain on the hospitality and retail sectors. As noted above, relaxation of some of Ontario's restrictions came after StatsCan's survey in June, so the data in the survey may well be understated. The same may well happen again in July, as the Province has just announced further re-opening that will again take place after this month's survey. This means that jobs created by that re-opening will only show up in the August data. 

This all sounds good, as indeed it is.  Still, total employment in the economy remains more than 340,000 or about 1.8 percent lower than it was in February 2020, and total hours worked remain 4 percent below their pre-pandemic peak. Provided there is no further significant setback in the fight against COVID, employment may fully recover last year's losses in the next two months. Given the growth in Canada's population and labour force, however, it will still be many more months before the unemployment rate falls back to its pre-COVID level.