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Canada’s labour recovery suffered a setback in April as the third wave of COVID-19 and tighter restrictions led to another round of layoffs.

The economy lost a net 207,100 jobs last month, undoing some of the 303,100 gain in March, Statistics Canada said Friday. The unemployment rate rose to 8.1 per cent from 7.5 per cent. All told, Canada has recovered about 83 per cent of its pandemic job losses.

The United States also disappointed on Friday as it reported a 266,000 gain in employment, well short of the one million jobs that economists were expecting.

A reversal in Canada was widely expected for April, given rising infection rates that month and the response to contain them. Employment fell by 152,700 in Ontario, where a stay-at-home order and other measures went into effect April 8. British Columbia, which implemented “circuit breaker” restrictions at the end of March, lost 43,100 positions.

“Another round of job losses could show up in the Canadian employment report for May, given that even harsher restrictions have been necessary in some parts of the nation,” Royce Mendes, senior economist at CIBC Capital Markets, said in a report.

“But the labour market has proven its ability to bounce back when virus cases are low,” he added. “As a result, look for this to be a temporary detour on the Canadian economy’s long road to recovery.”

Once again, it was the usual industries that suffered most. Wholesale and retail trade shed 89,100 jobs, hospitality lost 59,200 positions and culture and recreation fell by 26,200. Young people between the ages of 15 and 24 accounted for nearly half of the job losses in April.

“Those are areas of the economy that just can’t get back to normal as long as the pandemic’s with us,” said Brendon Bernard, senior economist at hiring platform Indeed Canada.

In a troubling sign, long-term unemployment is climbing. The number of people unemployed for 27 weeks or more grew 4.6 per cent in April to 486,000. (Broadly speaking, the unemployed are defined as available to work and actively searching.) Of that group, 312,000 have been unemployed for a year or longer, the highest on record. Long-term unemployment is up sharply for men and women of all ages.

The unemployment rate for racialized Canadians (ages 15 to 69) rose to 9.9 per cent from 9.4 per cent, while for white Canadians it was little changed in April at 7.6 per cent. Statscan noted that within B.C., Filipino Canadians lost around 35,000 jobs, accounting for most of the provincial drop.

Despite April’s challenges, there were areas of growth. Employment climbed by roughly 15,000 apiece in public administration, technology and finance. Several white-collar industries have stronger employment now than before the health crisis, forming the upper end of the K-shaped recovery.

South of the border, the U.S. result was a shock to observers, given the rapid pace of vaccinations and looser restrictions. “Nobody can come up with a good explanation” for the miss, said Royal Bank of Canada economist Claire Fan. She pointed to a number of potential factors, including a lack of child-care options, continuing health concerns and the “massive” income transfer to people from stimulus cheques and jobless benefit top-ups.

Employment in Canada is down 2.6 per cent since the pandemic began, while the U.S. is down 5.4 per cent, or 8.2 million people. “It remains highly feasible that Canada could regain all lost jobs during the pandemic later this year and well before the U.S.,” said Derek Holt, head of capital markets economics at Scotiabank, in a note to investors.

It appears many employers are planning for short-term hiring needs. As of late April, job postings on Indeed Canada were up 21 per cent compared with February, 2020. Labour demand is particularly strong in warehousing, construction, nursing and software development.

“The main story isn’t about April – it’s about what’s ahead, and the ability of businesses to fully reopen while case numbers remain down,” Mr. Bernard said. “That’s the test for the job market this summer.”

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