Canada: Recent soft streak in labor market should prove temporary

The Canadian employment report showed lower-than-expected readings on Friday and the second consecutive month of job losses. According to the analysts of the National Bank of Canada, Canada it continued to experience a third wave of weakness in the labor market with a substantial decline in employment following a significant decline in April.

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“The third wave of the pandemic was perpetuated in the reference week of the May Labor Force Survey. Canada continued to experience a third wave of weakness in the labor market with a substantial decline in employment following a significant drop in April (employment is now at 3% of its previous high). It should not be surprising that high touch service sectors were negatively affected by health measures (commerce, accommodation / food services, information / culture / recreation, education and other services). While these sectors were responsible for part of the loss, there was some contagion to the sectors least directly affected by the restrictions. In fact, the goods-producing sector declined for the first time since the worst month of the pandemic (April 2020) and manufacturing registered its first weakening since that same month. “

“As restrictions are gradually relaxed in June with vaccination targets well above expectations, the floodgates could open with students and workers on leave rushing back to work. We expect the sectors most affected by the pandemic to recover strongly in the summer months. Therefore, the recent soft streak should be temporary and the reopening of the economy should support hiring in the coming months. “