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Job growth in Canada exceeded expectations in November

Job growth in Canada exceeded expectations in November

New labour force data show that Canada is on its way to a full economic recovery, with employment exceeding expectations and unemployment near pre-pandemic levels.

Employers in Canada added 154,000 jobs to the economy in November. Last month's increase surpassed experts' expectations of 38,000, which was more in line with October's figures.

Employment increased by a full percentage point over pre-pandemic levels as a result of the gains. In addition, unemployment fell to 6%, which is within 0.3 percentage points of its February 2020 level.

The Labor Force Survey data from Statistics Canada reflect labour market conditions from November 7 to 13. Policies requiring proof of vaccination and other public health precautions were mostly unchanged from October.

"Accommodation and food service employment increased by 5,000 from October, but remains more than 200 thousand below pre-shock levels," Janzen stated.

"Travel and hospitality expenditure has recovered, but with the unemployment rate now significantly lower, it is becoming increasingly evident that there are not enough remaining unemployed employees out there to replace all of those jobs any time soon."

According to a new Statistics Canada report, Canada's economy is still recovering from the coronavirus outbreak. In September, 91,100 individuals were added to payrolls across Canada, marking the fourth consecutive monthly rise.

In eight provinces, payroll employment grew. With nearly 43,000 new employees added to payrolls, Ontario took the lead. The provinces of British Columbia (BC) and Quebec came in second and third, respectively.

The services-producing sector, notably lodging and food services, public administration, and banking and insurance, drove job growth across the country.

The reopening of the Canada-US border in August and the relaxing of travel restrictions for visitors in September, according to Statistics Canada, may have contributed to job growth in the tourism and allied sectors.

Job shortages are still a problem. At the start of September, there were over 1 million job openings. In the lodging and food sector, there were over 200,000 job openings, with a 14.4% employment vacancy rate. The job vacancy rate is calculated by dividing all vacant positions by the total number of vacant and occupied positions.

Over half of organizations in the hospitality and food service industries said they expect to have difficulty finding qualified workers. Only 30% of all other businesses have expressed similar worries.

In September, there were approximately 130,000 vacancies in health care and social support, roughly doubling the entire number of vacancies in the third quarter of 2019.

In September, there were roughly 122,000 vacancies in the retail industry. Meanwhile, the construction and manufacturing industries each had over 80,000 job openings. 

According to Statistics Canada, an increase in job vacancies may indicate increased economic activity and hiring as firms fill new positions.

It could also indicate growing fundamental labour market imbalances, such as skills shortages and regional mismatches between job openings and available workers.

It could also indicate a shift in workers' willingness to accept lower earnings, longer hours, and other characteristics linked with job openings.

In October, Canada added 31,000 jobs to its economy, and unemployment declined for the fifth month in a row.

The most recent Labor Force Survey results from Statistics Canada covered the week of October 10 to 16. Many provinces had conducted vaccination proof-of-concept projects that week.

Capacity limits had been lifted in Ontario, British Columbia, and Quebec, and they had been replaced by proof-of-vaccination requirements.

Gains in certain industries were counterbalanced by job losses in others. The retail trade business, for example, expanded for the first time since June, while job losses in accommodations and food services halted part of the expansion.

Unemployment declined for the fifth month in a row in October, down to 6.7 per cent. It was the lowest in 20 months, but not quite as low as the pre-pandemic rate of 5.7% in February 2020. While it looks like the economy is on the mend, some analysts believe that chronic labour shortages are impeding progress.

According to Nathan Janzen, a senior economist at RBC, the number of unemployed people is lower than what it would take to restore employment in the hospitality and food service industries to pre-pandemic levels.

Because of the substantial increase in industries such as professional, scientific, and technological jobs, it appears that there will be a shortage of workers in hard-hit industries.

Also, fewer workers returned to their jobs in accommodation and food services, manufacturing, and retail trade after facing a period of unemployment. This suggests that not all industries have recovered equally from the pandemic.

The employment rate for recent immigrants is still high. After coming to a halt in 2020, the number of very recent immigrants to Canada has surged in recent months. Although only 184,000 newcomers arrived in Canada last year, the country has already welcomed 267,000 permanent residents this year.

Those who have been in Canada for less than five years are considered "very recent immigrants" by Statistics Canada. In October, compared to the previous year, there were more very recent immigrants, and they were more likely to be employed.

The employment rate among this category of immigrants was 71%, approximately six percentage points higher than in October of this year.

Immigrants who had been in Canada for more than five years had an employment rate of nearly 60 in October, which is down less than one percentage point from October 2019. The Canadian-born population had an employment rate of 61 per cent on the dot.

Despite increased employment, labour shortages exist

The private sector-led hiring in November, both for full-time and part-time employees. Despite this, Canada continues to face labour shortages in industries such as hospitality, retail, and health care. There were about one million job openings across the country in September.

In late October, the majority of the government's COVID-19 financial support initiatives came to an end. It may have driven many to accept job offers, according to some observers.

The Canadian Recovery Benefit for Individuals, which had been criticized for deterring people from returning to work, was one of these policies. The lack of wage growth, according to the Conference Board of Canada, was an even larger disincentive, particularly in low-paid service industries.

"The withdrawal of the [Canadian Recovery Benefit] may have driven some employees back into employment," argues economist Liam Daly, "though this alone will not be adequate to address the major labour shortages afflicting key industries."

Despite the increase in employment, RBC economist Nathan Janzen argued that service sector employment remained "exceptionally low."

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