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A woman walks past a 'Help wanted' sign at a retail store in Ottawa, Ontario, Nov. 2, 2017.

CHRIS WATTIE/Reuters

The Canadian economy suffered another bout of layoffs in May, but the situation could turn quickly as provinces begin to shed their lockdown restrictions.

Employment fell by 68,000 last month, after a loss of 207,100 positions in April, Statistics Canada said Friday. The unemployment rate ticked up to 8.2 per cent from 8.1 per cent. The number of employed is down 3 per cent from when COVID-19 started, or roughly 570,000 people.

While the labour market was dealt a blow in the pandemic’s third wave, a rebound may be imminent, now that provinces are starting to gradually loosen their restrictions, thanks to lower caseloads and a quicker pace of vaccinations. Throughout the pandemic, employers have shown an ability to quickly rehire as public-health measures are eased, which bodes well for the coming months.

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One small wrinkle: Ottawa’s new hiring subsidy program doesn’t require companies to create jobs

Did Ottawa need to spend billions to safeguard jobs?

Canada’s labour recovery sees setback as economy sheds 207,000 jobs in April amid pandemic’s third wave

“We could see a surge in employment gains,” said Sri Thanabalasingam, senior economist at Toronto-Dominion Bank. “The ingredients are here for the economy to recover quickly in the second half of the year.”

May’s job losses were largely in part-time work, which fell by 54,200, and in the private sector, tumbling by 60,400. An elevated number of part-timers wanted full-time work, Statscan noted.

There were some troubling signs in labour participation. The number of women aged 25 to 54 participating in the labour force – largely, those working or searching for a job – fell by 39,300 in May. There was a notable increase of women who wanted work but didn’t look, perhaps owing to “unfavourable business conditions” in the third wave, Statscan said.

As well, labour participation fell by 37,500 for youth aged 15 to 24, which the statistical agency said was partly because fewer students were in the summer job market than usual.

For students, the summer employment situation is off to a better start than last year, but with much room for improvement. The unemployment rate for youth returning to school in the fall was 23.1 per cent in May, far better than last year’s 40 per cent – but worse than 13.7 per cent in May of 2019.

Employment for returning students was about 16 per cent lower than two years ago, equal to 177,000 people. Bolanle Alake-Apata, an economist at the Labour Market Information Council, noted that female and racialized students have seen particularly large drops to their employment rates. “Those are things about students we should definitely know,” she said.

A notable aspect of May’s report was the loss of work in the goods-producing sector, a first since April of last year. The manufacturing industry shed 35,900 positions and construction lost 15,800.

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At a regional level, the largest drops in employment were in Ontario (31,600) and Nova Scotia (22,200), which implemented a provincewide lockdown in late April.

As Canada eyes a summer recovery, a key question is the availability of workers, given the U.S. experience.

In recent weeks, U.S. employers have complained of struggling to fill positions as they reopen. The U.S. reported on Friday that it added 559,000 jobs in May, once again short of expectations. Despite a record number of job openings, about 7.6 million fewer Americans are employed than when the health crisis started.

“Our research suggests that generous unemployment benefit supplements are the main factor holding employment growth back,” Katherine Judge, senior economist at CIBC Capital Markets, said in a note to clients. “With many states moving to eliminate the supplements in June, however, this will likely be the last of the disappointing job [reports].”

Canada’s drop in labour participation “hints” at a possible temporary labour shortage this summer, said TD’s Mr. Thanabalasingam, although it may not be as severe as the U.S. situation. He pointed to less vaccine hesitancy in Canada, which could ease workers’ health concerns, and some income support programs that are ending by the fall.

“We know that employment is quite reactionary to restrictions as they’re implemented,” he said. “But we also know [that] as reopening takes off, employment can rebound quite quickly.”

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