Canada reports employment rise

Employment rise paints optimistic picture of recovery, economist says

Labour market showing strength with 290,000 jobs added,

Canada’s labour market unexpectedly strengthened after two-straight months of record losses as the country gradually reopens from COVID-19 related restrictions.

Employment rose by 289,600 in May, Statistics Canada said Friday in Ottawa, surprising economists who had been anticipating more losses last month.

The gains were across most industries and provinces, though largely driven by higher employment in Quebec, the province hardest hit by the pandemic. The numbers echo recent high-frequency data, which had signalled a recovery is underway, with job postings increasing and more Canadians reporting an increase in work at the end of May.

They will be a relief to policymakers who had been scrambling to inject hundreds of billions in cash into the economy to keep it afloat. Still, just under five million remain without work or substantially reduced hours with the jobless rate at postwar records.

“The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,”

Royce Mendes, an economist at Canadian Imperial Bank of Commerce, said in a research report.

The pick up in May follows an unprecedented loss of about three million jobs in March and April. More than two million employed Canadians continue to experience much lower hours worked than pre-crisis. The unemployment rate ticked up to13.7 per cent in May, from 13 per cent in April, as people returned to the labour force.

Economists in a Bloomberg survey expected a loss of 500,000 jobs, with the unemployment rate rising to 15 per cent.

Canada’s currency extended gains on the result, appreciating 0.7 per cent to $1.3406 Canadian against its U.S. counterpart at 9:46 a.m. Toronto time. Yields on two-year government bonds rose two basis points to 0.35 per cent

The better-than-expected report suggests the governments programs to cushion the blow to the labour market are working. By mid-May, 179,000 businesses had applied for the government’s 75 per cent wage subsidy program. The pace of applications to Canada’s emergency income benefit program has also decelerated in recent weeks, suggesting the worst of the layoffs and job losses is over.

In addition to the employment pick up, Statistics Canada said the number of people who worked less than half their usual hours dropped by 292,000. That means the number of Canadians who have either lost their job or worked substantially fewer hours has fallen to just under five million, from about 5.5 million in April. Hours worked rose 6.3 per cent in May from the prior month but were still 23 per cent below February’s levels .

The surprise jump reflects the cautious reopening of the economy across provinces. By the time the employment survey was taken from May 10 to May 16, some provinces including B.C., Saskatchewan and Quebec allowed some non-essential businesses to reopen.

Quebec accounted for nearly 80 per cent of May’s gains, the statistics agency said.