The Canadian labour market added 90k positions in August and was above the consensus call for 67k. This left employment 0.8% below its pre-pandemic (February 2020) level. Gains were in both full-time (+69k) and part-time (+22k) employment.
Canada’s labour force also expanded in August, rising by 9k. However, as employment gains were stronger, the unemployment rate fell by 0.4 percentage points to 7.1% in August, the lowest its been since the start of the pandemic.
By industry, the services sector (+93k) accounted for all of the job growth in August. High-touch services sectors such as accommodation and food (+75k), information, culture, and recreation (+24k) did much of the heavy lifting. Gains were also seen in professional, scientific and technical services (+15k), and public administration (+14k). Meanwhile, employment declines in other services (-30k), and finance, insurance, real estate, rental and leasing (-17k). On the whole, services sector employment returned to its pre-pandemic level for the first time in August.
On the goods side, employment declined by 3k positions. The manufacturing (-6k) and agriculture (-11k) both shed jobs last month, while the construction industry (+20k) saw employment rise for the first time since March this year.
In terms of provinces, Ontario (+53k) once again led the way, followed by Alberta (+20k), Saskatchewan (+10k), and B.C. (+14k). Most other provinces saw little change in August.
Total hours worked only ticked up by 0.1% m/m in August. This left hours 2.6% below the February 2020 level.
Key Implications
Canada’s labour market continued to make strides in August, adding a healthy number of jobs, especially in sectors that were hardest hit by the pandemic. Accommodation and food, and information, culture, and recreation, drove the improvement as public health measures were lifted across the country. In addition, relaxation of quarantine rules for U.S. travelers likely aided the recovery.
Still, even with August’s advance, the level of employment in high-touch industries was 10% (nearly 300k jobs) off its pre-pandemic mark, and gains have slowed despite provinces further reopening their economies this summer. Indeed, high frequency job postings data show robust demand for workers in these fields, but it appears labour supply has not kept pace, resulting in staff shortages. Career changes, and ongoing health concerns could be possible reasons for the lack of available workers.
Looking ahead, the Delta variant could complicate the labour market recovery in coming months. The virus may have already contributed to weaker confidence among consumers, which could lead to weaker spending activity, thus weighing on labour market improvements. The recovery is likely to be slower and bumpier this fall season.
