As job growth slows, restoring the remaining positions lost will be a challenge

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Canada added 245,800 jobs in August, a weaker pace than in previous months and a sign that hiring plans are shifting into a new phase.

The unemployment rate declined to 10.2 per cent from July’s 10.9 per cent, Statistics Canada said on Friday. With August’s gains, the labour market has now recouped about 64 per cent of the three million positions that were lost between February and April, when the COVID-19 pandemic forced widespread shutdowns to slow virus transmission.

The labour market added 953,000 jobs in June and 419,000 in July.

Recovering the remaining ground – about 1.1 million positions – is likely to be more challenging. Fewer COVID-19 restrictions are left to unwind, some businesses have permanently closed and others are struggling with less customer demand – all factors that could weigh on hiring.

“Labour markets are still exceptionally weak,” said Nathan Janzen, senior economist at Royal Bank of Canada, noting the current jobless rate is still above the peak of the 2008-09 recession. “The pace of the recovery going forward is an open question.”

Despite the uncertainty, Friday’s release included several encouraging signs. All of August’s employment gain came from the private sector, and most was in full-time jobs. As well, the labour-participation rate – the percentage of the total working-age population that are working or looking – rose to 64.6 per cent, within one percentage point of its level before COVID-19.

That “should allay some fears that generous income support is discouraging people from returning to the work force,” Andrew Grantham, senior economist at CIBC Capital Markets, said in a client note.

Friday’s report pertained to labour conditions between Aug. 9 and 15, meaning it accounted for further easing in Ontario. On July 31, the City of Toronto and nearby Peel Region moved into the third stage of the province’s reopening plan, which allowed the resumption of indoor restaurant dining and fitness classes, among other activities.

Employment in Ontario rose by 141,800 in August, the largest by province, with the gains almost entirely in full-time work. Employment jumped by 121,000 in the Toronto area.

“With provincial reopening plans having largely gone as far as they will go before a vaccine is available, we will be entering a new phase of the recovery where the path higher for employment is slower and potentially uneven,” Mr. Grantham said.

The August report continued to highlight disparities. Employment for low-wage employees (those who earned less than $16.03 an hour, or two-thirds of the 2019 median wage) stands at 87.4 per cent of pre-COVID levels. For all other employees, the recovery is nearly complete, with employment at 99.1 per cent of where it stood before the pandemic.

Statscan noted that nearly one-third of Southeast Asian and one-quarter of Black Canadians were in the low-wage bracket, compared with 15.9 per cent for the white population. (The agency debuted employment figures by race in the July report.) The unemployment rate for racialized Canadians (15.2 per cent) was substantially higher in August than for white Canadians (9.4 per cent), much as in July.

For a third consecutive month, employment rose by more for women (150,000) than men (96,000). That said, women suffered deeper job losses as the pandemic hit. As a result, employment for women aged 25 to 54 is down 4.4 per cent since February, compared to a 3.4-per-cent drop among men in the same age group.

A key question for the fall is how effectively educational and child-care systems resume, and how that affects women’s labour participation.

Separately, plenty of ground remains to be recovered in the accommodation and food services industry. While employment rose by 48,900 last month, the pace of growth slowed; industry employment is still down more than 20 per cent since February. Jobs in information, culture and recreation are down 13 per cent since the pandemic started.

“Employment in those industries will probably remain subdued until we’re really past the virus risks,” Mr. Janzen said.

That could be a long way off. With temperatures starting to fall, and with new virus cases creeping higher in some parts of the country, “there’s still the risk of virus resurgence” that looms over the labour recovery, Mr. Janzen said.

“That’s something that’s going to be a worry until we get an effective vaccine produced and distributed,” he added. “And as long as that risk is there, you’re going to still have some containment measures in place.”

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