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The Old Port of Montreal is seen through an empty parking garage in Montreal, Quebec, Canada, on Friday, March 27, 2020. Quebec Premier Francois Legault said he’s putting Quebec “on pause” to limit the coronavirus outbreak and stem physical contact. Photographer: Christinne Muschi/Bloomberg

Canada unexpectedly adds 290,000 jobs on gradual reopening

The Old Port of Montreal is seen through an empty parking garage in Montreal, Quebec, Canada, on Friday, March 27, 2020. Quebec Premier Francois Legault said he’s putting Quebec “on pause” to limit the coronavirus outbreak and stem physical contact. Photographer: Christinne Muschi/Bloomberg

Canada’s labour market unexpectedly strengthened after two straight months of record losses as the country gradually reopens from coronavirus (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 increase in May only represents 10 per cent of the COVID-19-related job losses and absences that occurred over the prior two months.”

— Royce Mendes, senior economist, CIBC Capital Markets

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 post-war 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 increase in May only represents 10 per cent of the COVID-19-related job losses and absences that occurred over the prior two months.”

(Photo: BNN Bloomberg)

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 to 13.7 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 C$1.3406 against its US counterpart at 9:46 am Toronto time. Yields on two-year government bonds rose two basis points to 0.35 per cent.

(Photo: Daily FX)

The better-than-expected report suggests the Government’s programmes designed 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 programme. The pace of applications to Canada’s emergency income-benefit programme has also decelerated in recent weeks, suggesting the worst of the lay-offs and job losses is over.

In addition to the employment pickup, 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 5.0 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.

Cautious Reopening

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 British Columbia, Saskatchewan and Quebec allowed some non-essential businesses to reopen.

An aerial view of Kelowna, British Columbia (Photo: Land Mark Centre)

Quebec accounted for nearly 80 per cent of May’s gains, the statistics agency said. In contrast, Ontario — where the economy remained largely shut until May 19 — saw more losses.

In the early days of the reopening, employment rebounded more strongly among goods producers, the data show. The goods-producing sector added 165,000 jobs versus 125,000 in services. Lower-wage jobs also rebounded more, particularly in retail trade, accommodation and food services.

Women Lagging

Demographically, male employment increased more than twice as fast as that for women, consistent with the more rapid increase in the goods-producing industry. Women were among the earliest victims of COVID-19-related job losses in March and the latest data suggest they are slower to recover as well.

“The kinds of jobs that reopened earlier tend to be more male-dominated in employment and also that more women don’t know how to get back to work because they don’t know what to do with their kids because schools aren’t open,” said Armine Yalnizyan, a research fellow at the Atkinson Foundation.

Women with at least one child under age six showed a slower return to work than women with older children. Statistics Canada said it will continue to monitor labour market outcomes for men and women with children in the months to come.

University students work on laptops on their balcony in Montreal, Quebec, Canada, on Friday, March 27, 2020. Youth are still suffering heavily from the COVID-19 economic shutdown. (Photo: Bloomberg)

Youth are still suffering heavily from the COVID-19 economic shutdown. While employment recovered by 30,000 for those aged 15-24, the cumulative job losses for this age cohort are still a whopping 843,000 from February to May.