July jobs jump

Statistics Canada reported this morning that the Canadian economy added 94,000 jobs in July, with the unemployment rate falling 0.3 percentage points to 7.5 percent. The increase was below the analysts' extravagant consensus expectation, which called for a rise of 165,000. Still, combined with the 231,000 jobs added in June, today's data mean that all the jobs lost during the most recent round of tight COVID restrictions in April and May have been recovered. Total employment remains 246,000 below its pre-pandemic (February 2020) peak. 

StatsCan's release analyzes the data in a wide variety of ways, but a few key points stand out.  Most notably, the job gains were heavily concentrated in Ontario, which saw an increase of 71,000. Premier Doug Ford was widely castigated for being too quick to reopen the Province's economy earlier in the pandemic; this time he has been more cautious, with reopening moves at the end of June and the middle of July driving the job gains seen in today's report.

All the job gains reported in July are in the services sector, with a rise of 35,000 in the accommodation and food services category, which has been whipsawed throughout the pandemic. Virtually all of the month's new jobs are full-time in nature. The private sector accounted for 124,000 new positions in the month as public sector employment declined for the first time in more than a year. In further indications of the improving health of the jobs market, the percentage of Canadians working from home edged lower and the underutilization rate fell by 1.2 percentage points to 14.4 percent, though both of these measures remain above pre-pandemic levels. 

There are early signs of an emerging fourth wave of COVID in Canada. The country's high vaccine uptake is likely to mean that further tight lockdowns will not be needed, but continued easing of the remaining restrictions may have to be delayed. Job gains in August may again be strong, as the full impact of Ontario's mid-July easing feeds into the data, but the pace is likely to slow in the Fall, especially if the US COVID picture continues to darken.

US jobs data for July were also reported today and came in well above expectations, with a rise of 943,000 positions in the month, just above an upward-revised gain of 938,000 in June. The unemployment rate fell to 5.4 percent. Nevertheless, the US recovery from the worst impact of the pandemic lags behind Canada's, with employment still 5.7 million, or about 3 percent, below its pre-pandemic peak.

President Biden has been quick to claim credit for the jobs surge, but is wisely warning that "we doubtlessly will have ups and downs along the way as we continue to battle the Delta surge of COVID." That seems almost certain, given the remarkably rapid rise in the case count in recent weeks.  The US economy undoubtedly has considerable momentum, but unless vaccination rates increase sharply, its prospects for further gains in the coming months seem more uncertain than Canada's.