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Canadian job creation slowed in October to its weakest pace of the economic recovery, but showed resilience outside of industries that were targeted by new COVID-19 restrictions.

The labour market added 83,600 positions last month and the unemployment rate fell to 8.9 per cent from September’s 9 per cent, Statistics Canada said Friday. Hiring slowed from around 378,000 jobs added in September and 246,000 in August. To date, Canada has recouped nearly 80 per cent of three million positions that were lost in March and April.

A weaker month was expected. Ahead of Friday’s report, economists had predicted a gain of only 75,000 jobs, partly because of new restrictions aimed at controlling a second wave of coronavirus cases. Those partial lockdowns did have an impact: Employment declined by 48,200 in the accommodation and food services industry in October, while culture and recreation dropped by 11,300 positions.

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But those losses were offset by strength in many other industries – a sign that targeted restrictions should allow much of the labour market to continue healing. Retail and wholesale trade added 45,300 positions last month, followed by hefty gains in professional services and health care.

“In general, the labour market is a lot more resilient to the pandemic than it was in the spring,” said Brendon Bernard, economist at hiring site Indeed Canada. He pointed to better knowledge of how the virus spreads and preventative measures (such as mask usage) that allow many industries to remain open.

Friday’s labour report “was better than some of our worst fears had suggested, and that’s an encouraging sign for the labour market over all,” added Stephen Brown, senior Canada economist at Capital Economics.

For its part, the U.S. added 638,000 jobs last month, slightly better than expectations. The private sector added 906,000 positions in October, while government jobs fell by about 268,000, with roughly half the impact coming from temporary census jobs. The unemployment rate dropped to 6.9 per cent from September’s 7.9 per cent, while labour participation improved.

The U.S. has now recovered 55 per cent of 22 million jobs that were lost in March and April.

“Any way you slice it, October’s jobs report paints an encouraging picture of the U.S. labour market,” said Leslie Preston, senior economist at Toronto-Dominion Bank, in a note to clients. “Still, there is a long road ahead to regain all of the 10 million jobs” that remain lost.

In Canada’s report, there were some encouraging signs. Most of October’s employment gain came from full-time positions, which rose by 69,100. The private sector accounted for most hiring, while self-employment perked up by 32,800 positions after a sustained slide through the summer.

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As temperatures cool and COVID-19 cases rise, Statscan found the number of Canadians working from home increased by roughly 150,000 in October. There was a total of 2.4 million people working from home who don’t usually do so.

British Columbia led the provinces with 33,500 positions added, followed by Ontario with 30,600. Ontario ploughed ahead despite tighter restrictions in some cities, including Toronto. At the other end, Quebec lost 12,900 jobs in October. Several parts of Quebec have been in partial lockdown since Oct. 1 and it accounted for roughly 87 per cent of Canada’s hospitality job losses last month.

Despite some progress, the labour market is showing signs of scarring. The number of long-term unemployed rose by 151,000 in October to a total of nearly 450,000 people, or one-quarter of all unemployed. Long-term unemployment includes those who are unemployed and have been searching for work, or are on temporary layoff, for 27 weeks or more.

“September and October increases in long-term unemployment are by far the sharpest recorded since comparable data became available in 1976,” Statscan said Friday.

As of October, there were roughly 635,000 fewer people employed than in February. Statscan also noted that roughly one in five part-time workers wanted full-time work but were unable to find it, up 5.6 percentage points from a year ago. The largest increase was observed in men aged 25 to 54.

The outlook for the labour recovery is mixed. Employment has fully rebounded in some industries, suggesting there’s little room for additional hiring. Meanwhile, Quebec has extended its restrictions on some close-contact service industries until later this month, while Manitoba recently moved to implement its own.

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On the other hand, Ontario will allow restrictions to loosen in some virus hot spots starting this weekend. “The easing of restrictions, at least in Ontario, should give a modest boost in November,” Mr. Brown of Capital Economics said. Still, the usual caveats apply: Keeping the virus in check is crucial for the job market.

“Can we make a real breakthrough next year, in terms of getting the public-health crisis under control?” said Mr. Bernard of Indeed. “That’s really what’s needed to get the labour market back to normal.”

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