Quick take

Unemployment hits new pandemic-era low as jobs recovery rumbles on

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  • Building on the gains of the previous two months, the labour market added 90,000 jobs in August. Total employment is now within 0.8 per cent of its pre-pandemic (February 2020) level.
  • The labour force participation rate ticked down to 65.1 per cent. Meanwhile, the unemployment rate fell to 7.1 per cent. This marked a new low for the jobless rate since the pandemic’s onset almost 18 months ago.
  • The largest employment gains continue to be concentrated in the hospitality sector.
    • The accommodation and food services industry led the charge by adding 75,000 jobs. Solid employment gains in the information, culture and recreation (+24,000) and professional services (+15,000) industries were also recorded.
    • On the goods side, employment was essentially unchanged. The construction sector added 20,000 jobs, but that was mostly offset by the agriculture (–11,000) and manufacturing (–6,000) industries.
  • Employment increased in four of the ten provinces. Ontario accounted for nearly 60 per cent of all jobs gained in August. Notable gains were also recorded in Alberta, Saskatchewan, and Nova Scotia.
  • Total hours worked did not change much in August and are still 2.6 per cent below their pre-pandemic level.

Key insights:

  • Though the job gains in August are a good sign, Canada is still down 156,000 jobs compared to February 2020. If employment remains subdued, a full economic recovery will take longer than expected. Combined with slower than expected economic growth in the second quarter, that could encourage the Bank of Canada to delay any further tapering to its Quantitative Easing (QE) program next month.
  • The fourth wave is driving up COVID-19 cases across Canada. Although roughly two-thirds of the population are now fully vaccinated, rising cases are a reminder that we are not out of the woods yet. Up to now, Canada’s fourth wave has been mild in comparison to the United States. But our comparatively limited health care capacity may trigger another round of lockdowns if the situation worsens, setting the recovery in jobs back once again.
  • Children are returning to classrooms amid rising COVID-19 cases. Despite efforts to keep schools safe, any signs of transmission from classrooms into the wider community raises the prospect of further school closures. If schools close, labour participation, particularly among women, is likely to fall—posing a further risk to the labour market recovery over the coming months.

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Richard Forbes

Richard Forbes

Senior Economist

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