Canada adds 94000 jobs in July as economy edges closer to full recovery – The Globe and Mail

Builders work on the site of a home in a new subdivision in the Ottawa suburb of Kanata, on Friday, July 30, 2021. THE CANADIAN PRESS/Justin Tang

Justin Tang/The Canadian Press

Canada’s job market is inching toward a full recovery after another spate of hiring.

The country added 94,000 positions last month and the unemployment rate fell to 7.5 per cent from June’s 7.8 per cent, Statistics Canada said Friday. As it stands, the economy has recovered about 92 per cent of its pandemic job losses, leaving another 246,000 positions to go.

In regular times, it would have been a staggering month of job creation. But in the context of a summer reopening, the July result fell short of expectations, as Bay Street analysts predicted a gain of 150,000 positions. Several hard-hit service industries showed little progress.

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Nonetheless, some details were encouraging. The entirety of job creation in July was driven by the private sector, where employment rose by 122,700. Nearly all the new jobs had full-time hours. And long-struggling young Canadians picked up the bulk of positions.

“The headline numbers were a bit disappointing, but over all, the details were extremely strong,” said Royal Bank of Canada economist Claire Fan.

U.S. hiring surges in July, unemployment rate drops to 5.4%

In the United States, the economy added 943,000 jobs last month, the U.S. Labour Department said Friday. The unemployment rate fell to 5.4 per cent from June’s 5.9 per cent. (Adjusted to U.S. concepts, the Canadian unemployment rate is 6.2 per cent.) Job growth not only topped expectations, but was paired with strong wage gains, a sign that American employers are sweetening their pay packages to fill record-high vacancies.

Looking ahead, there is scope for another summer bump in Canada. Friday’s report was based on surveying from July 11 to July 17; Ontario and Manitoba eased some of their COVID-19 health restrictions toward the end of that week, potentially shifting any hiring blitz to the August labour report.

“There will likely be one more seriously strong result for the current month, and then employment gains will likely settle into a long slog – after the reopening gains are done, and the global economy will be dealing with” the Delta variant, Bank of Montreal chief economist Doug Porter said in a note to clients. “But this is a sturdy step in the right direction.”

Accommodation and food services was the standout industry last month, adding 35,200 jobs as health restrictions were relaxed. Still, there is considerable ground yet to recover: Employment in hospitality is down 18.7 per cent over the pandemic, or 228,200 positions.

Other service industries were less fortunate in July. Employment was little changed in information, culture and recreation, which Statscan said was “constrained by travel restrictions and limitations on the size of public gatherings.” The retail industry had a sluggish month, as well.

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Ontario drove most of July’s job growth, posting a gain of 72,400. In all other provinces, results were tepid.

As Canada reopens, many employers say it’s tough to fill positions, citing a shortage of workers and pandemic income supports. Labour advocates say it’s not that workers aren’t available, but that people are holding out for better pay and conditions, or choosing to work in different industries.

“It is certainly a logistical headache for restaurants, thousands of which reopened at the same time, to reconnect with their former staff and recruit new staff,” Jim Stanford, economist and director of the Centre for Future Work, a think tank, said by e-mail. “But that is a sign of a bottleneck, and there is no evidence of a generalized labour shortage.”

The labour force participation rate held steady in July at 65.2 per cent, a touch lower than before the pandemic started (65.5 per cent). For its part, the U.S. is struggling to get people back in the work force. Its labour participation rate stands at 61.7 per cent, short of 63.4 per cent in February, 2020.

Brendon Bernard, senior economist at hiring platform Indeed Canada, noted that July saw a marked decline in the number of people who are unemployed and either on temporary layoff or starting a new job in the near future. At peak levels in the pandemic, this group numbered 1.2 million, but has since ebbed to 112,000 – a figure that was fairly typical before the health crisis.

In that sense, there may be fewer “quick wins” ahead for the labour market, Mr. Bernard said.

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“Are we going to be able to achieve this strong pace of job growth that we’ve seen during other reopening periods going forward? I’m not so sure.”

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