New jobs data on Friday showed that the Canadian economy added another 952,900 jobs in the month of June, exceeding expectations by a large margin. High frequency and alternative indicators of economic activity such as restaurant bookings, public transportation use and traffic congestion levels had predicted a large increase, as had some traditional measures like housing starts, which increased significantly in June.
The Canadian economy has now recovered over 40% of the jobs lost since the onset of Covid-19 in March. The unemployment rate fell to 12.3% from 13.7% in May. While we are still far from pre-pandemic levels, strong June gains in employment are no doubt a positive sign, despite significant regional disparities.
The unemployment rate in Quebec decreased significantly in the month to 10.7% from 13.7% in May after reaching a high of 17% in April, which may reflect Quebec’s faster opening up. Ontario’s unemployment rate also decreased significantly to 12.2% from 13.6% a month earlier. However, the unemployment rate in Alberta remains significantly higher than the national average at 15.5%, unchanged from the prior month. BC’s unemployment rate, at 13.0%, is also higher than the national average and decreased only marginally from 13.4% in May.
The economic recovery in Canada is tied to the United States. The number of new U.S. cases has surged, increasing fears that the U.S. economy may re-institute social isolation measures and/or delay reopening. The Trump administration may re-impose tariffs on Canadian aluminum products. Both moves would significantly hurt the economic recovery in Canada.
