The Canadian labour market recovery had a bit more gas in the tank in August. The ongoing reopening process helped drive employment higher, especially in pandemic exposed sectors like accommodation and food services, particularly in Ontario. While growth has cooled from its rapid pace earlier this year, gains were still pretty impressive at this stage in the recovery, especially given that the number of temporarily unemployed workers was already back to its pre-pandemic level.

One of the more noteworthy developments in August occurred beneath the headline employment change: the share of workers who switched jobs in August jumped above its pre-pandemic rate, after lagging since the start of the crisis. If this rise in job hopping persists, it raises increasing questions around how employers will navigate a tightening labour market. So far, while job postings on Indeed have been well above pre-pandemic levels for several months, overall wage growth according to the Labour Force Survey hasn’t shown much sign of acceleration.

 If staffing challenges extend beyond just attracting new workers to retaining current employees, the pressure to hike pay could rise. At the same time, uncertainty over the future course of both the pandemic, as well as government support programs for businesses and households, could cause some employers to hold off on major changes to compensation.