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Canada’s economy added a record-setting 952,900 jobs in June as lockdown restrictions eased across the country, undoing some of the economic damage inflicted by the pandemic.

The gains were almost evenly split between full-time and part-time work, and the unemployment rate dropped to 12.3 per cent from a record 13.7 per cent set in May, Statistics Canada said Friday. More people began searching for work last month, and fewer people lost the majority of their usual work hours because of the virus.

Combined with May’s gain of almost 290,000, the labour market has recovered about 40 per cent of the three million jobs lost in the early months of the pandemic.

“The easing of restrictions, which led to a visible increase in activity, allowed many Canadians to resume jobs that had involved physical interactions,” said Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, in a client note.

“However, that was low-hanging fruit in terms of a recovery,” he cautioned, noting the speed of hiring is likely to slow.

A blockbuster month was widely expected. Friday’s labour report reflected work conditions between June 14 and June 20, making it the first to account for some easing of restrictions in Ontario, along with the return of retail businesses in the Montreal region. Other provinces also loosened their pandemic rules, allowing more companies to return and rehire.

In turn, every province registered employment growth in June. Ontario set the pace with a gain of 377,900 jobs, followed by Quebec at 247,500 and British Columbia at 118,100. Given that Toronto and nearby Peel Region didn’t ease restrictions until after Statscan’s survey period, the July report could see another sizable bump.

Some hard-hit industries mounted a comeback. Employment rose by 163,700 in the accommodations and food services industry and by 184,000 in retail trade. Still, employment in hospitality is down a third from February levels, and retail is down 11 per cent.

Health care and social services was another standout sector, as employment rose by 121,100, with Statscan pointing to the resumption of some non-essential health services. Construction and manufacturing also notched a strong month, with a combined gain of almost 165,000.

With the exception of wholesale trade, employment in all industries remains lower than before the pandemic.

“We’re still far from where things stood entering this crisis,” said Brendon Bernard, economist at Indeed Canada, a job-search website. “Mending the remaining damage could be more challenging” than May and June’s gains, he added.

There are several reasons why economists suspect hiring will shift into a lower gear in the coming months. For one, the initial wave of rehiring has come from companies that were able to reopen quickly, both for safety and financial reasons. But some industries, such as travel and dining, will be heavily restricted for the foreseeable future.

Even when companies reopen, they may not be able to rehire like before. Thirty-four per cent of small businesses said they were back to normal staffing levels, and 24 per cent were registering normal sales for this time of year, according to a recent survey by the Canadian Federation of Independent Business.

Further, “while restrictions continue to be relaxed, it’s not happening at the same pace,” Mr. Mendes wrote. “Given international experience, there seems to be a clear limit on the extent to which the economy can reopen without a resurgence in the virus.”

That could make the recovery challenging for groups that were disproportionately affected by pandemic job losses, including women, young people, the less educated, gig workers and low-wage employees.

In June, employment rose slightly more for women (6.1 per cent) than for men (5.5 per cent). However, Statscan noted that men of all age brackets are closer to recovering jobs lost since February.

“For a full recovery for both genders, we’re going to need solutions from government, both on child care and elementary education,” said Sheila Block, senior economist at the Canadian Centre for Policy Alternatives.

Making matters worse, layoffs are continuing to pile up as companies grapple with financial pressures. In some cases, companies are shuttering stores for good. Beverage retailer DavidsTea Inc. said Thursday it is closing 82 stores in Canada and all of its 42 U.S. locations as it pivots to e-commerce and supplying grocery stores.

“For low-wage workers, the question isn’t going to be [when] the pandemic shutdown” ends, Ms. Block said. “It’s how are the industries that they would like to return to being restructured.”

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