Canada’s economy marked a milestone in September as employment returned to pre-pandemic levels for the first time, recouping the remainder of three millions jobs lost over a year ago with a gain of 157,000 jobs. 

The gains in September were widespread and concentrated in full-time work, with notable gains in industries where many workers continue to work remotely. Some public-sector gains were related to the Sept. 20 federal election. Employment for core-aged women, those between 25 and 54, finally recovered as the school year began, months after they bore a disproportionate brunt of job losses in what’s been dubbed a “shecession.”

The bumpy return from last year’s historic employment drop comes with a few caveats, with economists warning we aren’t in the clear yet. As the unemployment rate hit 6.9% in September, down from 7.1% in August, the number of unemployed Canadians still remains above pre-pandemic levels. The rate would have been 8.9% in September, down from 9.1% in August, had the agency included in calculations Canadians who wanted to work but didn’t search for a job. Highly skilled and highly paid workers are doing better than they did before the crisis, but Statistics Canada’s latest hiring data suggest that thousands of the working poor remain on the sidelines, as there were 654,000 fewer workers making less than $20 per hour in September than there were at the start of the pandemic.

The rebound to pre-pandemic levels also doesn’t account for population growth and where the country would have been absent the shock of COVID-19. Statistics Canada estimated the economy would need between 110,000 and 270,000 more jobs to close that gap. Brendon Bernard, senior economist with job-posting site Indeed, said this second milestone is likely to be reached next year.

Some high-contact sectors like retail, which lost 20,000 jobs in September, and accommodation and food services, which saw its first decline in five months as 27,000 jobs were lost, remain further from pre-pandemic levels despite an easing of restrictions. 

The ranks of long-term unemployed who have been without work for six month or more was little changed in September at 389,000, more than double the number recorded in February 2020. Leah Nord, senior director of workforce strategies with the Canadian Chamber of Commerce, said there is little information to explain why those workers remain unsuccessful in their ongoing job hunt.

Anthony Mantione, a senior economist with the Labour Market Information Council, said one reason could be a skills mismatch with available jobs. He suggested focusing efforts on long-term unemployed workers could be beneficial as they account for one-quarter of all unemployed will have more difficulty landing a job the longer they are out of work.

The Bank of Canada has about two weeks to decide what it will do to its stimulus program before its next interest rate announcement on Oct. 27. The central bank has tracked jobs numbers in deliberations about the path for its key rate and the bond-buying programs that aim to encourage low interest rates and prod consumer spending.

On October 7, Bank of Canada governor Tiff Macklem said frictions in the labour market come from the unique circumstances of the pandemic, with some workers not wanting to return over health concerns, while childcare responsibilities may hold back others. “What we’re seeing here is it is more complicated to open the economy than to close it, and this process of companies finding workers and workers finding the right jobs, it’s taking some time,” Macklem said.

He also said the central bank is tracking wage growth so it doesn’t become an independent driver of inflation, which is running above the bank’s target. Statistics Canada said wages rose year-over-year by 1.7% in September, and by 4.6% compared to 2019, a pace BMO chief economist Douglas Porter noted was good, but not strong. CIBC senior economist Royce Mendes said September’s headline jobs figures likely seals the deal that the Bank of Canada will further ease the pace of its bond-buying program during a schedule rate announcement on Oct. 27.

Source: Globe and Mail
Source: The Star
Source: Financial Post