Canadian employment rose in February, reversing most its net decline of the prior two months. Similar to last summer, the labour market was able to make a solid rebound as the pandemic slowed. At the same time, the recovery is far from complete: the share of the population employed remains 2.4 percentage points lower than in February 2020, a relatively wide gap by the standards of past recessions.
Getting the employment rate back to its pre-pandemic baseline will not only require large gains in the near-term, but also for momentum to maintain a strong clip for an extended period. Canada will likely need employment growth to average roughly 95,000 per month over the rest of the year for the current gap to close before 2022. By pandemic reopening standards, such a pace might not seem daunting, but prior to last year, the Labour Force Survey had only reported monthly gains above 95,000 three times.
March could add to the quick wins made in February, especially with a resumption of activity in regions like Toronto. While the pandemic’s third wave may halt these gains in April, ongoing progress in vaccinations provides some light at the end of the tunnel. Businesses appear to be gearing up for this prospect, with sentiment jumping in March, along with a surge in job postings on Indeed across a range of sectors. How these trends will translate to the labour market depend among other things on further progress with the vaccine rollout, and whether the economy smoothly handles an eventual pull-back in pandemic-era government support programs.
