E-Sight November 6: Canada delivers solid job gains in October, but labour market recovery is slowing sharply

Canadian employment increased by 84,000 in October. This was better than expected, as many economists feared the new COVID-19 restrictions implemented in October would result in further job losses. Even still, October’s increase represents a dramatically slower employment gain than seen in prior months.

October’s job gains were concentrated in full-time positions, which increased by 69,000. Part time employment remained virtually unchanged. The unemployment rate held steady at 8.9%. At its peak, employment declined by 3 million jobs in April. So far, the Canadian economy has recovered slightly more than three quarters of the jobs lost during the economic downturn, leaving a remaining 635,000 positions left to get back to the pre-COVID-19 level.

By industry, October’s results were mixed. Employment declined by 48,000 in accommodation and food services as health measures were reintroduced. Employment in this industry remains 19.2 per cent below its pre-pandemic level making it the hardest hit industry. Employment in the information, culture and recreation industry remained steady despite the new measures to close theatres, casinos and other amusement centres. Employment gains also stalled in several other industries. Transportation and warehousing, construction, education and other services all saw little change in their employment this month.

On the positive side, the retail trade sector saw 31,000 new jobs in October. However, despite strong retail sales data in recent months, employment is still 5.1% below its pre-pandemic level. The other industries to see gains were the wholesale trade and the professional, scientific and technical services industries which increased by 15,000 and 42,000 respectively. Both these industries are now above their pre-pandemic levels of employment. 

The employment picture was uneven across the country. Employment increased in five provinces, Ontario, British Columbia, Alberta, Newfoundland and Labrador and Prince Edward Island. For the rest of the provinces, employment remained steady.

The downturn had impacted women more than in prior recessions, but the latest data show that the labour market recovery for women has been strong. Employment for core working age women (ages 25 to 54) increased by 40,000 in October bringing the level of employment in this group to within 1.4% of its pre-pandemic level. This month’s employment increase moved their unemployment rate to 6.6%, which is the lowest rate among all the main demographic groups. Conversely, the recovery for core aged men appears to be lagging that of woman. Employment for core aged men increased by 25,000 returning employment to within 2% of its pre-pandemic level. The unemployment rate for core-aged men remains at 7.6%, unchanged from the previous month.

The number of long-term unemployed continued to rise in October. Long-term unemployment is defined as those unemployed for more 27 weeks. In October, the number of people who were long-term unemployed increased to 448,000 accounting for nearly a quarter of all unemployed. While it is not surprising that the number of long-term employed is increasing as we are now capturing people who lost their jobs in March and April, it is a trend to be concerned about. More than half of these people reported having trouble meeting their necessary expenses. The effects of long-term unemployment are also well documented and include mental health issues and challenges returning to the job market as skills deteriorate.

The bottom line is that the quick employment gains seen previously appear to be tapering off, suggesting that the recovery is losing momentum. This is not surprising as the rapid growth phase of the recovery, fueled by the reopening of previously closed sectors, is now effectively complete and a recent spike in new cases is forcing new closures. Looking ahead, we expect the moderate job gains seen this month to continue as the recovery becomes more protracted and uneven. We expect that it will take until late next year for the economy to recover the jobs that were lost at the height of the downturn.

Categories: E-Sight, Economics

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