Quick take

September job growth testifies to labour market’s resilience

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  • The economy added 157,100 jobs in September, pushing total employment beyond the 19 million mark for the first time since the pandemic’s onset. This marks an important milestone as employment now exceeds its pre-pandemic (February 2020) level.
  • Labour force participation rates rose to a pandemic-era high of 65.5 per cent. Meanwhile, the unemployment rate (6.9 per cent) decreased for a fourth consecutive month.
  • Over 90 per cent of September’s employment growth stemmed from gains in the services economy. There was notable employment growth in public administration (+37,200) and information, culture and recreation (+32,500).
    • Elsewhere, the start of a new academic year pushed up employment in educational services (+21,300). The transportation and warehousing sector also performed well, partly a reflection of increased travel demand.
    • Across the goods economy, the performance was mixed. The impact of drought in western Canada pushed agricultural employment down for a tenth consecutive month. After an energetic start to the year, residential construction cooled over the summer, and in September, construction employment fell by 10,900. However, these declines were offset by employment growth in manufacturing (+22,100).
  • Employment rose in the provinces of Ontario (+73,000), Quebec (31,200), and Manitoba (+7,800). Meanwhile, there was little change in British Columbia, Prince Edward Island, and Nova Scotia.
  • Despite the growth in employment, there was little progress in reducing the number of long term unemployed. The number of long-term unemployed in September were 389,000 compared to 179,000 recorded prior to the pandemic.

Key Insights

  • September marks the end of the third quarter, during which the labour market added almost 350,000 jobs. A direct result of the reopening of the economy, these gains represent a significant step forward for the labour market and are in line with our forecast of an unemployment rate of 7.2 per cent in the third quarter. With employment now past its pre-pandemic level, we expect job growth to moderate over the coming months as the economy continues to absorb spare capacity.
  • Several Government support programs will soon expire. As the support programs end, many businesses will hope to see more people become available to work. Yet, the extent to which these programs have contributed to labour shortages is unclear. We believe labour shortages are a symptom of weak wage growth. Anecdotally, wage pressures are building, but the data continue to show tepid wage growth. According to Statistics Canada’s metric that adjusts for pandemic-related disruptions, average hourly wages have risen by a meagre 0.18 per cent each month so far this year. Given the weak wage growth, there is little reason to worry about a wage-inflation spiral any time soon.
  • Amid the fourth wave, several COVID-19 hotspots have emerged across the country, once again stretching hospital capacity. This underscores the continuing threat posed by the virus. But, thanks to vaccinations and proof-of-vaccination rules, governments are better-placed to avoid the strict restrictions that drove heavy job losses during the previous waves of the pandemic. Despite the fourth wave, the job growth in September highlights the growing resilience of the labour market to the pandemic. A resilience that might be tested if government support for certain segments of the economy is withdrawn too soon.

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Liam Daly

Liam Daly

Economist

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