Question Period Note: Labour Force Survey - May 2021

"• Employment decreased by 68,000 in May, below market expectations of a 20,000 decline. Employment is now 571,000 jobs (-3.0%) short of its pre-pandemic level.
• The unemployment rate rose 0.1 percentage points to 8.2%, in line with market expectations, while the labour force participation rate fell 0.3 percentage points to 64.6%.
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"• The third-wave caused employment to fall for a second consecutive month.
• A continued reminder that keeping the virus under control – including providing access to vaccines – is the best way for our recovery to remain on track.
• Third-wave impacts show that the fight against the virus is still very much on and that we are still far from the finish line.
• About 1.2 million Canadians who had a job before the pandemic are still out of work or working sharply reduced hours.
• The wage subsidy program kept many Canadians connected to their employers, which would speed up the recovery as businesses begin to fully reopen.
• Budget 2021 is about finishing the fight against COVID, and ensuring lost jobs are recovered as quickly as possible.
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"IN-BRIEF
• Bottom Line: A negative report, as the loss of 68,000 jobs, following a decline of 207,000 jobs in April, was larger than anticipated. This brings third wave impacts to a total decline in employment of 275,000 and 370,000 more Canadians working sharply reduced hours. The report reflects labour market conditions during May 9-15, which was too early to capture the most significant re-opening that occurred later in the month in Quebec, British Columbia and Alberta.

• Recovery Relative to Pre-Pandemic: Overall, 81% of the 3 million jobs lost at the peak of the crisis have been recouped (down from 83% in April and 90% in March), still well ahead of the U.S. (66%), despite their large jobs rebound in May. By comparison, in Australia, employment is now about 0.4% above pre-pandemic levels as of April. There also appears to have been less scarring in Canada with labour force participation in Canada holding close to its pre-pandemic level of 65.5% while the rate in the U.S. is at 61.6% (1.7 p.p. below pre-pandemic).

• Workers Impacted by COVID: In addition to the 571,000 job losses since February 2020, 617,000 additional workers were working less than half their usual hours compared to pre-pandemic norm (83,000 more than in April). These bring the number of workers impacted by COVID-19 to about 1.2 million in May.

• Industry Breakdown: Goods-producing industries drove the losses in May, led by sharp declines in manufacturing (-36,000) and construction (-16,000), reflecting restrictions and supply chain disruptions. The services sector also saw losses, driven by retail trade and other personal services. Accommodation and food, the most heavily impacted industry overall, was little changed. These declines were partly offset by continued strength in natural resources and professional services.

• Provincial Breakdown: Ontario and Nova Scotia drove the national decline, reflecting their tighter restrictions at the time of the May survey. In the remaining provinces, employment was little changed, with the exception of Saskatchewan where it increased for a second consecutive month.

• Workers Impacted: Job losses in April were concentrated in part-time work (-54,000), though full-time work also eased. As in April, the private sector drove the decline in jobs. Despite the larger-than-expected fall in employment, total hours worked were mostly unchanged in May, which implies that economic activity held up better. Total hours worked now stands 3.8% below their February 2020 level.

• Demographics: Women (-54,000) saw larger losses than men (-14,000), further widening the gender gap. Employment for women is now 4.2% below its February 2020 level, while men are 1.9% below. Youth employment declined by 27,000 in May, bringing it to 11.1% below February 2020.

• Outlook: Employment numbers for May are expected to be the last weak reading for the labour market before reopenings begin. With restrictions easing and Canadians getting more comfortable attending in-person activities, we expect the June survey (June 13-19) to show a large rebound in employment. Given population growth since February 2020, a 763,000 increase in employment is required for the employment rate to return to its pre-crisis level of 61.8%.
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