Canada: Labour markets continued healing in June, but a long road still ahead - RBC Financial Group

According to ActionForex, analysts at RBC Financial Group note that that Canadian employment rose by 953k in June, the second month of improvement. 

"This was a fair bit stronger than the consensus expectation of 700k, and, together with May’s showing, means that roughly 40% of the jobs lost in March and April have been recovered. The labour force also recovered markedly, up 786k net persons, leaving the headline unemployment rate at 12.3% (down from 13.7% in May)."

"Statistics Canada continued to report labour market “underutilization”: about 27% of the potential labour force remained underutilized last month, meaning unemployed, not in the labour force but wanting a job, or working less than half of normal hours. This marked a further improvement from May’s 34% rate, but is nevertheless well above historic norms."

"June brought a 167k drop in the level of unemployment, and the composition has changed in line with re-openings and a return of job searchers. Temporary layoffs now account for about a quarter of unemployment, down from half two months ago, while those who were previously not in the labour force more than doubled to roughly 40% of the total."

"Another step in the right direction. There remains a long road ahead to regain the roughly 3 million jobs lost as a result of the pandemic, but the pace so far has defied expectations. It was not just the employment gains that were encouraging, but also the strong rise in the labour force. This may be telling us that Canadians are becoming a bit more confident from a health perspective – recall that at the height of the pandemic, there was a massive increase in people who had stopped looking for work entirely. The generally improving new infection numbers provide hope that the labour market healing can continue."

"The pace of future gains remains an open question. There is the risk that what we’ve seen so far has been the “low hanging fruit” as operations that are able to safely re-open have done so. The pattern of gains will likely vary in the coming months as well. International travel restrictions are likely to remain in place for some time, with implications for those that tend to serve domestic versus international tourists, for instance."

"Ultimately, while today’s numbers are encouraging, there are almost 1.8 million lost jobs yet to be recovered. It is still a long way to the finish line."