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May Labour Force Survey: April’s Weakness Continues


June is likely to look different as the reopening begins.

A disappointing, though not shocking May Labour Force Survey. The Canadian labour market took another step back in May, following a substantial drop in April. The scale of the decline was large by normal monthly standards, but calmer compared to the wild volatility of the first four months of 2021. In contrast to employment, hours held steadier, partly reflecting a rebound in the education sector.

Unlike other recent Labour Force Surveys, the May dip also featured a setback in manufacturing, while construction eased for a second straight month. Pandemic-exposed sectors like retail, and other services (which includes personal care) remained under pressure. Meanwhile, accommodation and food service, the industry farthest from its pre-pandemic level, experienced a milder drop than in past months. 

It was tough to expect much from the labour market through mid-May, as third-wave restrictions remained tight. June should prove more positive, as provinces start reopening. This could lead to quick gains in some parts of the economy that haven’t been operating normally in months. At the same time, getting back to a strong labour market will also require progress in areas less directly affected by the pandemic. While the May numbers were a bit disappointing, job postings on Indeed remain elevated, suggesting solid employer hiring appetite.