The Canadian economy lost 68,000 jobs in May, marking the second consecutive month of job losses.
The Canadian labor market weakened for a second month amid widespread restrictions on controlling a third wave of Covid-19.
The economy lost 68,000 jobs in May, Statistics Canada reported Friday in Ottawa. This adds to the 207,100 positions lost in April. The unemployment rate rose to 8.2% from 8.1%. Economists in a Bloomberg poll had predicted a loss of 25,000 jobs, with an unemployment rate of 8.2%.
Despite consecutive monthly setbacks, analysts expect a rapid rebound as early as this month as containment measures are lifted. Ontario and Quebec, the two largest provinces, have been gradually reopening in recent weeks, with a rate of vaccinations increasing and cases declining.
The country went through two major waves of Covid-19 closures during the winter months that have hampered recovery efforts, starting with restrictions in December. The 270,000 jobs lost in this second wave fully recovered in just one month in February, when restrictions were lifted. Economists predict the same recovery this time around.
“We’ve now seen a bit more job losses in this third wave (April and May losses) relative to job losses in the second wave,” said Eric Lascelles, chief economist at RBC Global Asset Management, at BNN Bloomberg Television. “At least it’s comparable, and that makes sense. We’ve seen a pretty significant block on this route. “
The current wave coincided with new restrictions that began in April. Many provinces maintained Covid restrictions for most of May while trying to control a third wave of the virus.
Economists forecast a good rebound in the second half of the year as companies reopen and consumers become comfortable attending face-to-face activities, although there are some concerns about outages that could undermine any rebound.
The U.S. labor market, where employers have problems with shortages, is a cause for concern, as many workers south of the border choose to stay on the sidelines because of childcare obligations, improved unemployment benefits and skills mismatches. At 64.6%, Canada’s labor force participation fell for a second month to its lowest level since August.
The Canadian jobs report coincided with the release of U.S. payrolls, which rose by 559,000 last month, below the projected 675,000. Canadian government bonds rose, with ten-year yield trading about 3 basis points below Thursday’s levels to 1.49% at 9:39 a.m. in Toronto. The five-year yield fell to just below 0.9%. The Canadian dollar rose 0.3% to C $ 1.2076 per US dollar.
“While we continue to look for a solid rise in employment over the summer and into the fall, the slow recovery of jobs in the U.S. sounds like a precautionary note,” said Doug Porter, chief economist at the Bank of Montreal, in a report to investors.
The potential for a sharp rebound and a faster-than-expected full recovery has already prompted the Bank of Canada to begin stopping its stimulus and warning of higher interest rates.
Canada’s economy remains at 571,100 jobs outside of pre-pandemic levels. The unemployment rate was less than 6% before the pandemic.
The fall in May was largely for part-time workers, who saw employment decline by 54,200 during the month. Full-time employment decreased by 13,800. Hours worked varied little during the month.
(Updates with analysts commenting in paragraph 10).
–With the assistance of Erik Hertzberg.