Canada’s job market continued on its path to recovery from the effects of COVID-19 by adding 418,500 jobs in July, beating expectations of 380,000.
New data from Statistics Canada show the unemployment rate fell to 10.9 per cent, from 12.3 per cent in June. But there’s still a long road ahead to get back to the 5.6 per cent we saw in February, before the pandemic considering we’re 1.3 million jobs short of the February level.
Most of the new positions in July were part-time (345,000), as provinces continued to gradually reopen.
“Job gains were largely seen in part-time employment, although that's were much of the destruction occurred early on in the crisis,” said CIBC economist Royce Mendes.
“The pace of increase in employment slowed in July relative to the prior month, and that's likely to become a trend as the pace of easing in restrictions also slows down and the number of Canadians on temporary layoff falls.”
Mendes says the good news is that Canada has a relatively low number of COVID-19 cases, which means there is a low risk of shutting down again.
More people returned to their places of work as the number of people working from home dropped by 400,000.
As restaurants and bars reopened to varying degrees, employment rose 12.3 per cent in accommodation and food services but remains only 74.9 per cent of its February level.
“Hard-hit areas of the service sector, which were furthest from pre-pandemic levels in June, continued their rebound last month, with accommodation and food service accounting for an outsized share of job growth,” said Indeed economist Brendon Bernard.
“Return to work in these areas is crucial to recovering the massive losses sustained in March and April.”
As it did in June, Ontario led the way with 151,000 positions, followed by 98,000 in Quebec.
A strong jobs report typically causes the Canadian dollar to move higher because it signals economic strength that could lead to higher interest rates. But the Bank of Canada has been crystal clear that it’s not raising rates anytime soon.
“The Canadian dollar weakened modestly after the release. Monthly employment data, historically among the leading market movers in foreign exchange, has been relatively toothless of late,” said Don Curren, market strategist and content editor, at Cambridge Global Payments.
“While monetary policy is arguably, over the long-term, a more consequential factor for currencies than fiscal policy, in the current context the reverse appears to be the case.”
Although employment rose faster among women (3.4 per cent) compared to men (1.5 per cent), men are still closer to being back at pre-pandemic levels of employment.
For the first time, Statistics Canada tracked race-based effects of COVID-19 on the job market. It found South Asian, Arab, and Black Canadians had the highest unemployment rates in July.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.