Quick take

Employment gains continue as Canada reopens for the summer

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  • The Canadian labour market added 94,000 (+0.5%) positions in July, bringing total employment within 1.3 per cent of pre-pandemic (February 2020) levels. In contrast to June, gains this month were led by growth in full time employment (+83,000), while gains in part time employment (+11,000) were relatively modest.
  • Labour force participation rates remained unchanged on the previous month at 65.2 per cent. Meanwhile, the unemployment rate dropped to 7.5 per cent, a small decline that brings it in line with the low recorded in March 2021.
  • Job growth was, unsurprisingly, concentrated among service industries (92,900), with the strongest gains in high-contact services, including accommodation and food services (+35,000).
    • Meanwhile, sectors less sensitive to restrictions, including finance, insurance, real estate, rental and leasing (+14,800) along with the health care and social assistance (+13,100) sectors also performed well.
    • On the goods side, employment remained flat, as gains in manufacturing (+8,800) were offset by falls in construction (–3,900) and agriculture (–4,200).
  • Six of ten provinces saw employment grow in July with Ontario (+72,000) leading the charge. Alberta (+12,300) and Manitoba (+7,400) also registered strong gains. Notable employment declines were recorded in Saskatchewan (–4,500), British Columbia (–3,100), and New Brunswick (–2,500).
  • In a signal of declining labour underutilization, the number of people working less than half their usual hours declined by 10.1 per cent. Meanwhile, total hours worked grew by 1.7 per cent, just 2.7 per cent off pre-pandemic levels.

Key insights:

  • Reopen and jobs will grow! That’s the mantra the labour market has followed. The labour market recovery is now at its most advanced stage since the pandemic’s onset. High vaccination rates have allowed provinces to proceed along the pathway to a full reopening of the economy.
  • However, not all is fine and dandy. While July’s fall in the unemployment rate is of course welcome, the share of the unemployed who have been out of work for 27 weeks or more (long-term unemployed) still account for almost 30 per cent of total unemployment. Worse still, the number of people unemployed for a year or more account for more than two-thirds of long-term unemployment, the highest on record. An inclusive labour market recovery requires reversing the stubbornly high long-term unemployment.
  • At the current rate, Canada is likely to surpass pre-pandemic levels of employment by the end of-2021. Despite further gains expected over the rest of the summer, a resurgence in novel variants in the fall may drain energy from the labour market, especially if restrictions are reinstated. We’re not out of the woods just yet.

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Liam Daly

Liam Daly

Economist

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