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A server brings an order to a customer at a restaurant in Montreal, Sunday, on 2021, as the COVID-19 pandemic continues in Canada and around the world. Canada has recovered about 95 per cent of its pandemic job losses, leaving a deficit of roughly 156,000.Graham Hughes/The Canadian Press

Canada’s labour recovery plowed ahead in August as employers continued a summer hiring binge.

The country added 90,200 positions for its third consecutive month of growth, and topped analyst expectations of 66,800 positions, Statistics Canada said Friday. The unemployment rate fell to 7.1 per cent from July’s 7.5 per cent. Canada has recovered about 95 per cent of its pandemic job losses, leaving a deficit of roughly 156,000.

The job market was hit by widespread layoffs in the third wave of the COVID-19 pandemic. But from June to August, as vaccination rates improved and health restrictions were relaxed, employment jumped by around 350,000 positions, erasing all the damage from the spring.

In August, job creation was driven largely by full-time work in the private sector. Accommodation and food services was a standout industry, climbing 74,600 positions on robust gains in Ontario. Labour participation rates have fully recovered in most demographic groups, Statscan noted on Friday.

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At the same, some details were less encouraging. The total number of hours worked in the economy was little changed in August. Meanwhile, self-employment remains a weak spot, down 7.7 per cent – or 222,000 positions – from when the health crisis started.

“The overall number – 90,000 jobs gained – was a solid number,” said Sri Thanabalasingam, senior economist at Toronto-Dominion Bank. “The concerning part is that it could have been stronger,” he added, drawing attention to service industries that are nowhere close to a full recovery, but have ample job vacancies.

“We are seeing some indications in the data of labour shortages. ... It’s hard to say conclusively what it is – whether it’s people switching careers, or because they’re concerned about the virus still, or because of fiscal support. We can’t really pinpoint what it specifically is.”

Indeed, the reopening process has been a challenge for some businesses, which say they’re struggling to fill openings as potential workers remain on pandemic-related income supports or change industries.

In August, labour shortages were mentioned on 315 calls with investors by public companies across the world, according to a review of transcripts on financial data platform Sentieo Inc. Between 2005 and the start of the pandemic, a monthly average of 17 calls referenced such challenges.

“We are hearing from some businesses that the process of finding and hiring workers is proving complicated and time-consuming,” Bank of Canada Governor Tiff Macklem said Thursday in a speech. “And for some companies, this has made it hard for them to keep up with the rebound in demand. We have all seen help wanted signs at restaurants and stores.”

Labour advocates say higher wages and better working conditions would go a long way to alleviating any staffing shortages. Thus far, however, it appears that wage growth is subdued. The average hourly wage of $29.23 was up 5.2 per cent from two years ago, but only 1.2 per cent this year, after adjusting for compositional changes to the labour force over the pandemic.

“Wage pressures are at a nascent stage of the recovery in tightening labour markets and businesses would do well to build into their plans and projections what it takes to keep their top performers,” Derek Holt, head of capital markets economics at Bank of Nova Scotia, wrote in a note to investors.

The Canadian economy will face a test this fall from the Delta variant of COVID-19. A resurgence of cases was partly to blame for tepid job creation in the U.S., which added 235,000 positions in August, compared with expectations of 720,000. Employment actually fell in the hospitality industry. High-frequency data show activity weakening at U.S. restaurants and airports, fuelling concern that the economic recovery is shifting into a slower phase.

So far, it appears Canadian consumers are holding up well. Restaurant dining is on the upswing. More people are travelling. And credit-card transactions are well above prepandemic levels. Adjusted for population, Canadian cases of COVID-19 are running at about one-fifth of U.S. infections.

Despite recent gains, close-contact industries have a lot of jobs to recover. Employment in hospitality is down 12.6 per cent, or 153,600 jobs, over the pandemic. In the meantime, employment in other services – which includes hair stylists and massage therapists, among others – is down 11.1 per cent, or 89,800 positions.

September should bring another month of job creation, Mr. Thanabalasingam said. “When we come to October, this is where the Delta variant becomes more of a risk.”

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