Economy lost 68,000 jobs in May, unemployment rate rose slightly to 8.2%

Canada's labour market shed 68,000 jobs last month as tighter public health restrictions continued or were introduced in many regions of the country to slow the third wave of the COVID-19 pandemic.

Statistics Canada's Labour Force Survey data released Friday shows the employment rate was 8.2 per cent, up from 8.1 per cent in April, leaving employment at 3 per cent below pre-pandemic levels.

Most of the jobs lost, 54,000, were part time, following a drop of 78,000 in April. The number of people working full time was down by just 13,800, following a decline of 129,000 the month before.

Ontario and Nova Scotia were the only provinces to register employment declines in total employment. The Statistics Canada report said the extension to Ontario's stay-at-home order accounted for most of the employment decline. The drop in Nova Scotia was largely due to the province entering lockdown at the end of April.

Ontario's jobless rate was pegged at 9.3 per cent, up from 9.0 per cent in April. Nova Scotia's rate was 9.8 per cent, up from 8.1 per cent. Employment increased in Saskatchewan — its jobless rate was 6.3 per cent, down form 6.6 per cent — while there was little change in all other provinces.

Manufacturing, construction reported job losses

The number of people working in manufacturing fell by 36,000, down two per cent, making that the first such decline in the industry since April 2020, the labour force survey found. Ontario and Quebec accounted for the majority of the overall decline in the sector.

"Despite the fiery housing market, construction also reported a second consecutive setback, as Ontario was restricted to only essential projects," Bank of Montreal economist Douglas Porter said in a note.

Nearly 16,000 job losses were reported in construction, driven mostly by Ontario's pandemic-related restrictions implemented April 17, the survey found.

The country lost more jobs than expected, said Sri Thanabalasingam, senior economist at TD Economics. But he said the acceleration in the vaccine rollout may provide employers with added confidence and boost hiring plans."

"That said, the drop in this month's participation rate is concerning," Thanabalasingam said.

"With fewer people engaged in the labour market, Canada could face labour shortages as demand for labour recovers faster than supply. This will be an area to watch closely in the coming months."

"I think the bigger picture is still, in our view, constructive, but it's gonna take time; it's not gonna happen over a matter of a few months," Jimmy Jean, vice-president and chief economist for Desjardins Group, told CBC News.

Jean said a mix of factors is behind reports of possible labour shortages down the road. He said "a lot of people are uncomfortable" about getting back into the labour market, with some wondering if it's safe. Others are weighing government benefits, as some programs can more than compensate for those who make minimum wage

Number of discouraged job searchers remains high

While the number of unemployed overall remained relative steady in May, more people dropped out of the labour force, people Statistics Canada refers to as "discouraged searchers."

The report said there were 49,700 people who wanted work but didn't look for jobs in April, "because of business conditions or because they believe no work is available." That's down from the record high of 146,000 in April 2020, but still more than twice the average of 22,000 seen in 2019.

WATCH | Economist talks about how keeping schools closed can affect working parents:

Economist talks about how keeping schools closed can affect working parents

3 years ago

Duration 1:12

Jimmy Jean, vice-president of Desjardins Group, says Ontario's recent decision not to reopen schools is tough for some parents in the labour market, particularly women, because not everyone is able to work from home during the pandemic.

The Statistics Canada report said the country will continue to transition out of the third wave of the pandemic over the coming months, and noted that employment rebounded at a "record-breaking pace" last summer as the country emerged from the first round of public-health restrictions.

It said that since the May figures were compiled, restrictions have eased in multiple jurisdictions. In B.C., for example, many indoor and outdoor activities resumed on May 25. Quebec ended its nightly curfew and reopened outdoor patios on May 28, while Ontario's stay-at-home order expired on June 2, making way for the first phase of its reopening plan to kick in on June 14.