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

Ontario and Nova Scotia were the only provinces to register employment declines in total employment. The Statistics Canada report saidthe 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 provinceentering lockdown at the end of April.

Ontario'sjobless rate was pegged at9.3 per cent, up from 9.0 per cent in April.Nova Scotia's rate was 9.8 per cent, up from8.1 per cent.Employment increased in Saskatchewan its jobless rate was 6.3 per cent, down form6.6 per cent while there was little change in all other provinces.

Manufacturing, construction reportedjob losses

The number of people working in manufacturing fell by36,000, down two per cent, making that the first such decline in the industry since April2020, 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'spandemic-related restrictionsimplemented April 17, the survey found.

The country lost more jobs than expected, saidSri Thanabalasingam, senior economist at TD Economics. But he saidthe 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 thebigger 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, toldCBC 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 intothe labour market, with some wondering if it's safe.Others areweighing 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 saidthere 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 downfrom the record high of146,000in April2020, but still more than twice the average of22,000seen in2019.

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 continueto transition out of the third wave of the pandemic over the coming months, and noted thatemployment 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 multiplejurisdictions. In B.C., for example, many indoor and outdoor activities resumed on May25. Quebec ended itsnightly curfew and reopened outdoor patioson May28, while Ontario's stay-at-home order expired on June2, making way for the first phase of its reopening plan to kick in on June 14.