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June Labour Force Survey Preview: How Quickly Can Reopening Close the Gap?


Previous reopenings have brought large gains.

The Canadian labour market has been highly volatile since last fall, but on net, the employment rate stands where it did in October. Despite substantial improvement from last spring, the share of the population with a job remains 2.4 percentage points lower than in February 2020, a wide gap by previous-recession standards. That said, recent experience suggests the situation is poised to change quickly. 

Employment rose by more than 250 thousand in both February and March this year, as the pandemic’s second wave receded. While some of those gains might not be repeated, such as in health care and social assistance, and education, most of the growth came from pandemic-exposed industries. These areas are poised to rebound once again. Visits to restaurants have jumped in recently, as have food services job postings on Indeed, which in mid-June stood further above their pre-pandemic level than the 29% increase in economy-wide postings. Consumer spending in areas like accommodation as well as clothing also grew in June.   

Returning to a reopening pace of job growth could bring the Canadian employment rate back to its pre-crisis levels pretty quickly. If gains can sustain an average of 150,000 per month, the share of the population with a job should be back to its February 2020 level of 61.8% before the end of this year. Greater near-term could even put the recovery ahead of schedule. At a more modest 75,000 per month employment growth, a similar pace to the US’s 0.4% average monthly payroll growth between April and June, the gap will close by mid-2022.

The challenge for the overall Canadian labour market recovery since the initial wave of pandemic layoffs hasn’t been so much achieving a solid pace of employment rebound, but rather, sustaining it. The vaccine rollout offers a chance to break the cycle. The more daily life starts to resemble normality, and can stay that way, the more normal conditions for job seekers will be too.