Jobs data letdown suggests recovery may be bumpy
Canada's economy is on its way to recovery, but the July jobs data, which delivered an unexpected slowdown, indicates there are still hurdles in the way.
Employers added 94,000 positions last month and the jobless rate shrank to 7.5 per cent from 7.8 per cent in June, Statistics Canada reported on Friday. Pairing July's gains with the 231,000 jobs in the month prior, the country more than recouped the losses in April and May as it battled a third wave of COVID-19 infections.
Still, the report came in well short of what most Bay Street forecasters had anticipated given that most provinces already implemented loose reopening protocols since the beginning of the pandemic. The numbers could be influenced by the timing of the survey, which occurred between July 11 and 16, with the tail end coinciding with fuller reopenings in Ontario and Manitoba.
“It could be that businesses were waiting for reopening before accelerating hiring just to see how strong consumer demand comes back,” Sri Thanabalasingam, a senior economist at Toronto-dominion Bank, said in an interview. “Even though we got a miss in July, it does suggest that August numbers could be quite strong because of when the survey week landed.”
The median estimate of economists surveyed by Bloomberg News was that the economy would add 150,000 jobs in July, while the unemployment rate would fall to 7.4 per cent.
On the plus side, most of the employment gains were concentrated in full-time work whereas in June part-time positions led the growth. Fulltime positions increased 0.5 per cent to about 15.3 million, the most since March. The number of people who worked less than half their usual hours fell by 10 per cent to 116,000 — another sign of improvement.
“That's suggesting some increasing confidence in employers that the worst of the pandemic could be behind us,” said Thanabalasingam. “That is why they're bringing more full-time staff on as opposed to part-time.”
All of the new jobs created came from service-producing sectors, reflecting the cross-country reopenings and rotating consumer demand for the offerings of pandemic-hit businesses.