Economy continues to add jobs, but many remain lost
August 7, 2020 | 4-min read
Focus Area—Canadian Economics
The Conference Board of Canada’s Senior Economist, Cory Renner offers insights on the July Labour Force Survey (LFS):
“Canada’s economy continues to recover, as indicated by the 418,500 jobs created in July. However, the increase is less than June, suggesting the initial bounce-back is now behind us. At this point, most restrictions have been lifted across the country but only 55 per cent of jobs lost between February and April have been recovered, meaning employment is still down more than 1.3 million compared to February. Despite the lifting of restrictions, Canadian businesses are operating in a challenging environment because of risks associated with COVID-19—a situation we expect will last at least another year. Fully restoring Canada’s employment levels will take time as business closures are holding back both consumer and business confidence.”
- Employment rose by 418,500 in July, led by 345,300 part-time jobs. The increase in jobs indicates Canada’s economic recovery continues, although at a slower rate of job expansion compared to June (+952,900).
- Canada has now regained 1.66 million of the 3 million jobs lost from February to April, during the full shutdown caused by the pandemic.
- The discrepancy between jobs lost and jobs recovered is concerning. At the point the survey was taken (between July 12 and 18th), some provinces were still dealing with COVID-19 outbreaks, but most restrictions had been removed. This means that many of the more than 1.3 million jobs that have yet to come back are being held back by consumer confidence, business closures, and related factors. As a result, these jobs may take much longer to return.
- The unemployment rate fell to 10.9 per cent in July. At face value, the decline is good news as it indicates a smaller number of people were unemployed. However, at this point in the recovery, it would be more encouraging to see workers re-enter the labour force, even if it led to a higher unemployment rate.
- While the official unemployment rate fell for the month, more stringent measures of unemployment, such as those that include involuntary part-time workers, were unchanged.
- All provinces except New Brunswick saw an increase in July. The largest increases occurred in the biggest provinces. Ontario led the way (+150,700), Quebec also saw a large rise (+97,600) as did British Columbia (+70,200) and Alberta (+67,300).
- In percentage terms, the largest increases were in Alberta, British Columbia, Quebec and Manitoba.
- The labour market helps us get a sense of how each province is recovering. Canada has now recovered 55 per cent of the jobs lost between February and April. Provinces such as New Brunswick (75 per cent) and Quebec (70 per cent) have recovered the highest share of jobs. Other provinces have also done well, such as Manitoba (60 per cent), Saskatchewan (60 per cent) and British Columbia (58 per cent). Ontario (43 per cent) and P.E.I. (48 per cent) have seen the slowest pace of recovery.
- Of the 418,500 jobs gained in July, 347,900 of them were in the services sector. This isn’t overly surprising—the pandemic (and the restrictions it brought about) affected service industries the most, and, as a result, we would expect an unwinding of the restrictions to lead to a rebound in services employment.
- In all, 59 per cent of goods and 54 per cent of services industry jobs have been recovered.
- By industry, the largest increases occurred in wholesale and retail trade (+101,300), accommodation and food services (+100,500) and other services (+39,500).
- Despite the job recovery in July, employment in many industries remains well below pre-pandemic levels. Accommodation and food services has been the hardest hit, with employment still down 25 per cent from February levels. Information, culture and recreation industries have also been slow to recover, with employment still down 14 per cent compared to pre-pandemic levels.
- Average weekly wages surged during the pandemic, as job losses were focused in lower wage industries. With the economy slowly recovering its lower-wage and part-time jobs, the aggregate average weekly wage is easing back to more normal levels.
- Average wages are up 6.1 per cent compared to last July, a decrease from the 8.1 per cent year-over-year gain in June. We expect average wage gains to turn negative by next year given the extended period of labour market slack.