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Reopening of the economy sparks restart of the labour market recovery

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The Conference Board of Canada’s Economist Liam Daly offers the following insights on June’s Labour Force Survey (LFS):

As economic restrictions across much of Canada began to ease, the labour market responded with solid employment gains concentrated in sectors where the restrictions have been most punishing. Improvements in several high-contact service industries drove growth in part-time employment and provided welcome job growth among young and female workers. As measures continue to ease, the stage is set for an acceleration in the labour market recovery over the coming months

  • After two months of falling employment, June’s labour force survey showed a labour market rebounding, in which total employment rose by 230,000. This brings total employment in Canada to within 1.8 per cent of pre-pandemic levels.
  • Given the timing of the reference week and the easing of public health restrictions in several provinces, employment gains may have actually been larger than those recorded in the June labour force survey and will show up in next month’s numbers.
  • The reopening of the economy underway across Canada suggests the labour market has reached an inflection point moving beyond the third wave and into a period of recovery marked by rising employment among some of the hardest-hit industries in the economy, such as high-contact service industries.
    • This was most notable in the accommodation and food services which added a total of 101,000 jobs, representing an impressive monthly employment growth of 11.8 per cent.
    • Employment in the wholesale and retail trade sector increased by 2.9 per cent (an additional 75,000 jobs) as many regions saw restrictions on non-essential stores ease or lift.
    • Similarly, employment in the other services industry, which includes personal care, repair and laundry services, performed well, growing by 3.3 per cent.
    • Workers that are highlight represented in the hospitality and retail sectors saw strong recovery last month with employment growing by 7.1 per cent among workers ages 15 to 24.
  • Beside employment, there were other signs of growing confidence in the labour market with almost 170,000 workers entering the labour force in June, pulling the participation rate up to 65.2 per cent – its highest level since the onset of the pandemic.
  • While the labour force expanded, the national unemployment rate fell 0.4 points to 7.8 per cent. The unemployment rate is expected to decline further over the coming months. Over the third quarter of 2021 we forecast an average unemployment rate of 7.0 per.
  • The uptick in employment was driven largely by growth in part-time employment which increased by 263,900; this heavily outweighed a small decline in full-time employment.
  • The reopening of the economy is set to precipitate a transition of many remote workers back to offices. As a testament to this Statistics Canada estimates that the number of people working from home fell by 400,000 in June. This shift was also reflected by a 2.6 per cent increase in employment in the business, building and other support services industry.
  • Across the country employment rose in Quebec (+72,300), Ontario (116,900), British Columbia (+42,100) and Nova Scotia (13,800). These gains outweighed declines in the Saskatchewan (-1,200), Manitoba (-6,400) and Prince Edward Island (-1,400). In the remaining provinces, New Brunswick Newfoundland and Labrador, and Alberta employment remained essentially flat.
  • While employment grew in almost all service-producing sectors a very different picture played out among the goods producing sector, which experienced an employment contraction for the second consecutive month.
    • Employment in the manufacturing sector fell by 0.7 per cent, reaching a six-month low while construction employment declined by -1.6 per cent to its lowest level this year.
    • The fall in employment in the construction sector is largely due to a drop in the number of self-employed workers in the industry.
  • As vaccination rates continue to rise there is reason to expect an improving picture in the months ahead as province’s are able to escape the cycle of tightening and easing restrictions and instead sustain progress towards a full reopening.

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Liam Daly

Liam Daly

Economist

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