Canada’s job market ploughs ahead, but December set for ‘significant decline’

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The Canadian labour market continues to defy expectations – at least for now.

Employment rose by 62,100 jobs in November and the unemployment rate declined to 8.5 per cent from October’s 8.9 per cent, Statistics Canada said Friday. The gain was driven by full-time work, which rose by nearly 100,000 positions. All told, the labour market has recovered about 80 per cent of the three million jobs that were lost in March and April at the start of the pandemic.

While November’s gain was the weakest since the recovery began in May, it was also better than anticipated. The median estimate from economists was a gain of 20,000 positions, with many calling for a decline owing to tighter COVID-19 restrictions across Canada.

That said, a setback may be simply postponed. Statscan’s report, which pertained to work conditions from Nov. 8 to 14, did not account for the latest public-health measures in many regions, including much tighter controls in Toronto.

“The good news is that the Canadian economy was able to outrun COVID for another month,” said Royce Mendes, senior economist at CIBC Capital Markets. However, once new restrictions are accounted for, “we are unfortunately looking for a decline in employment in December.”

The November report showed some cracks. For one, Manitoba lost around 18,000 jobs. The province moved into the “critical” phase of its COVID-19 response – which includes a ban on in-person shopping of non-essential goods – during Statscan’s survey period. Most affected workers in Manitoba were working part-time hours, Statscan said.

“The numbers coming out of Manitoba could end up being a harbinger of what happened in other parts of the country,” Mr. Mendes said.

Once again, industries requiring close contact are getting hit. The information, culture and recreation industry lost 25,600 positions last month. Accommodation and food services fell by 23,800 for its second consecutive monthly decline. About one-quarter of people on temporary layoff last month were in the hospitality industry.

The pandemic continues to play out differently by wage bracket. For those earning $17 or less an hour, employment is down 12 per cent compared with February, according to an analysis of Friday’s data by the Canadian Centre for Policy Alternatives, a left-leaning think tank. For those earning $35 and up, employment has increased by 3 per cent.

Friday’s report also highlighted challenges for women. After six consecutive gains, employment for women between the ages of 25 and 54 stalled in November. And despite a full rebound in jobs for mothers, their work hours are being disrupted by COVID-19.

“Patterns in absences from work ... indicate that mothers may be experiencing different challenges than fathers, particularly among parents whose youngest child was under 13 years of age,” Statscan said.

Conversely, there were several encouraging signs in November’s report. The goods-producing sector returned to growth, adding around 44,200 positions. In particular, construction was a standout industry, seeing employment rise by 26,300 – the first increase since July, driven largely by Ontario.

“Residential construction is quite a busy sector right now,” said Travis O’Rourke, president of recruiting agency Hays Canada.

Ahead of the holiday shopping season, transportation and warehousing jumped by 20,300 positions. And with its latest gain, the finance, insurance and real estate industry is back to prepandemic levels of employment.

“What we’ve seen throughout the recovery is resilience in a number of sectors,” Mr. Mendes said.

Furthermore, all Atlantic provinces enjoyed job growth in November. That’s brought New Brunswick, Newfoundland and Labrador and Nova Scotia back to precrisis levels of employment.

Despite some pockets of strength, the near-term should be challenging. Close-contact service industries will be severely curtailed for some time, while economic output is widely expected to contract in December, ending the year on a sour note.

“Unfortunately, I think we’re going to see a significant decline [in employment] in December,” Mr. O’Rourke said.

Beyond the short term, however, he said there’s “new optimism” from companies owing to greater political certainty in the United States and the prospect of widespread vaccine deployment in 2021, allowing long-delayed projects to get off the ground.

“Corporate Canada has started to make hiring plans,” Mr. O’Rourke said. “Just from anecdotal confidence in speaking to people, 2021 is going to be a big year for the Canadian economy.”

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