Positive signs in August for the labour market

There was good news on the labour front on Friday as more jobs were created in August and the unemployment rates fell in the Calgary region, in Alberta and across the country.

Statistics Canada reported that employment in the Calgary census metropolitan area rose by 2,600 in August. Year over year employment is up 36,200. The unemployment rate fell to 9.6 per cent from 9.8 per cent in July.

Employment in Alberta rose by 19,500 in August. Year over year employment is up 128,100. The unemployment rate fell to 7.9 per cent from 8.5 per cent in July.

Employment in Canada rose by 90,200 in August, the third consecutive monthly increase. The unemployment rate fell 0.4 percentage points to 7.1 per cent. In the past year, 957,800 jobs have been created in Canada.

According to ATB Economics, in its daily economic update The Owl,  full-time jobs in Alberta increased by 0.9 per cent (16,300) while part-time jobs increased by 0.7 per cent (3,100).

The unemployment rate in Alberta is the lowest it has been since February 2020 when it was sitting at 7.5 per cent.

“There were 193,400 Albertans out of work and actively looking for employment in August. Compared to the pre-pandemic benchmark of February 2020, employment in the province was still down by 0.7 per cent or 15,900 jobs,” said ATB.

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Alberta Minister of Jobs, Economy and Innovation Doug Schweitzer said with new investments in tech, film, energy, agriculture and more, Alberta’s Recovery Plan is creating jobs and diversifying the economy while building for the future.

“Just this month, we saw announcements from Imperial Oil of a new hydrogen refinery and a joint hydrogen facility from Mitsubishi and Shell in our province, solidifying our lead as a global leader in hydrogen development,” he said. “August’s job numbers confirm projections that Alberta will lead Canada in economic growth this year and next. Just this week, the Conference Board of Canada reaffirmed their projection that Alberta will lead Canada in growth this year and next year.

“We know there is still more work to do and government will remain focused on economic recovery and job creation. With our capital plan creating tens of thousands of jobs and oilsands production rising more than eight per cent in the first half of the year, exceeding 2019 levels and non-energy investment returning to 2019 levels this year, Alberta has a bright future.”

Royce Mendes, an economist with CIBC Economics, said summertime in Canada showed again just how strong the labour market can be when there’s a lull in COVID cases. 

“The economy created another 90,000 jobs in August, which topped consensus expectations and came after even stronger gains in the prior two months. The easing of restrictions continued to allow for more employment in services sectors. Most of the hiring showed up in the private sector and were for full-time jobs. That said, there were a few flies in the ointment, with hours worked essentially unchanged and the participation rate falling,” he said.

“The latter helped push the unemployment rate all the way down to 7.1 per cent, the lowest since the pandemic began. Moreover, the economy is still a long way from being fully healed. While employment according to the Labour Force Survey is only 0.8 per cent below its pre-COVID level, other indicators of the economy suggest more weakness. The country is also now in the midst of a fourth wave which will restrain growth this fall. So, while today’s employment reading might nudge the Bank of Canada to taper asset purchases again in October, rates are likely to remain on hold until late next year.”

Doug Porter, Chief Economist with BMO Economics, said overall, a solid report which will act as a bit of an antidote to last week’s sour GDP result. 

“On balance, the continued decent gains in employment suggest that the recovery was still grinding forward in late summer even in the face of the budding fourth wave and ongoing supply bottlenecks. Employment is now just 0.8 per cent away from returning to pre-pandemic levels, and the 7.1 per cent unemployment rate is now precisely in line with its 20-year average. For the Bank of Canada, these two facts suggest that it’s entirely appropriate to keep pressing ahead with the tapering timeline,” he said.

Sri Thanabalasingam, Senior Economist with TD Economics, said  Canada’s labour market continued to make strides in August, adding a healthy number of jobs, especially in sectors that were hardest hit by the pandemic.

“Accommodation and food, and information, culture, and recreation, drove the improvement as public health measures were lifted across the country. In addition, relaxation of quarantine rules for U.S. travelers likely aided the recovery,” he said. “Still, even with August’s advance, the level of employment in high-touch industries was 10 per cent (nearly 300,000 jobs) off its pre-pandemic mark, and gains have slowed despite provinces further reopening their economies this summer. Indeed, high frequency job postings data show robust demand for workers in these fields, but it appears labour supply has not kept pace, resulting in staff shortages. Career changes, and ongoing health concerns could be possible reasons for the lack of available workers.  

“Looking ahead, the Delta variant could complicate the labour market recovery in coming months. The virus may have already contributed to weaker confidence among consumers, which could lead to weaker spending activity, thus weighing on labour market improvements. The recovery is likely to be slower and bumpier this fall season.”

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