- Employment rose 419k in July. From May to July, Canada has added back nearly 1.7 million of the roughly 3 million net jobs lost in March and April. The labour force rose 150k as more people looked for work (June: +786k). With employment gains outpacing labour force growth, the headline unemployment rate fell to 10.9% (from 12.3%)
- Hours worked again outpaced the rise in headline employment growth, up 5.3% m/m, and have now recovered about 60% of the March and April losses. The gain in hours worked was helped by a further drop of 412k in people working less than half their regular hours last month, although Statistics Canada notes that there were still roughly 972k reporting significantly less hours worked than typical last month. Consistent with this, the labour “underutilization” rate dropped to 22.4%, still double its pre-pandemic level.
- The big driver this month was part-time work (+345k), and work in the service-producing sectors (+348k), as both retail/wholesale trade and accommodation and food services added 100k net positions. Of the sectors that were hardest hit, retail/wholesale trade has shown the strongest recovery, with 74% of earlier losses recovered as of July. For goods-producing sectors (+71k overall), gains were driven by construction and manufacturing, with both sectors adding roughly 30k net positions in July.
- Ontario led the employment gains again in July (+151k), reflecting the later easing of pandemic response measures compared with other provinces. Quebec (+98k), B.C. (+70k), and Alberta (+67k) all saw solid gains and drops in their unemployment rates. The Atlantic region remained a strong performer.
- Statistics Canada notes that despite the strong recovery so far, young Canadians, and low-wage workers remained disproportionately affected by job losses. Indeed, in July, employment among low-wage earners was 85.4% below pre-pandemic levels, compared with 97.4% for all other paid employees.
Key Implications
- Three in row. Canadian employment growth continues to defy expectations, with a solid 419k net jobs added last month (consensus: +390k). With more than half of losses now recovered, we’ve seen as unprecedented a recovery in employment as the initial shock itself. Still, when you’re a bit more than halfway to recovery, there is a long road ahead, and continued gains of the magnitudes we’ve been seeing are unlikely.
- We can be reasonably sure that more gains are in store for the next report, as Toronto and Peel regions moved to “Stage 3” after the July employment survey was completed. However, the distribution of the recovery is likely to remain a reflection of ongoing pandemic response measures – this can already be seen by comparing the recovery in retail/wholesale trade and accommodation and food services. Despite adding a similar number of jobs last month, the former has now recovered 74% of pandemic losses, but the latter less than half.
- Ultimately, this was another welcome report, but we must not lose sight of the scale of the impact and the longer-term challenges in getting back to pre-pandemic employment levels. If this is indeed a ‘checkmark’ or ‘swoosh’ recovery, expect these and other impressive near-term gains to give way to a much more gradual recovery path and one that will feel very different across industries.
