Canada's Unemployment Rate Rises To 13.7%, But The Country Actually Added Jobs In May

Canada added 290,000 jobs in May, surprising experts who had been predicting another month of large job losses.

But with more people re-entering the workforce to look for jobs as lockdowns began lifting in May, the jobless rate rose to 13.7 per cent, Statistics Canada said Friday.

That’s the highest unemployment rate in the data set going back to 1976. The previous high was 13.1 per cent in 1982.

“From February to April, 5.5 million Canadian workers were affected by the COVID-19 economic shutdown,” StatCan said. “This included a drop in employment of 3 million and a COVID-19-related increase in absences from work of 2.5 million.”

Watch: New jobs in the COVID-19 pandemic. Story continues below.

“The gain in employment in May was the largest one-month increase going back to at least the 1960s, but still only retraces about 10 per cent of jobs lost over March and April,” Royal Bank of Canada senior economist Nathan Janzen wrote in a client note.

“To be clear, labour markets were still exceptionally soft in May. Employment is still down 2.7 million from February. ... But the tick up in employment in May, and larger monthly increase in hours worked, reinforces that the latest downturn probably ended at two months, with a long recovery beginning in May.”

Just as women were hit disproportionately during the layoffs, women seem to be getting rehired more slowly than men. The number of employed men rose by 2.3 per cent in May, while rising 1.1 per cent for women.

Men had 9.4 per cent fewer jobs in May than they did a year earlier, while women’s jobs were down 12.2 per cent.

StatCan says this is because the goods-producing sector is bouncing back faster than the services sector. For instance, construction work has resumed but restaurant dining rooms largely remain closed in most places.

Among low-wage work, the gap was enormous in May: There were 93,000 more men employed in jobs paying $24 an hour or less in May, while women added less than half that, or 41,000 jobs.

Ontario jobs still shrinking

Ontario was the only province still to see shrinking job numbers in May, with the province shedding 65,000 positions. Its jobless rate rose to 13.6 per cent.

“This is consistent with the fact that most restrictions on economic activity remained in place in Ontario during the (Labour Force Survey) reference week of May 10 to May 16,” StatCan noted.

British Columbia, which was among the first to start reopening, saw employment jump by 43,000. Its unemployment rate rose to 13.7 per cent as more people looked for work.

Alberta added 28,000 jobs, and its jobless rate jumped two full percentage points to 15 per cent.

Quebec, which restarted its construction and manufacturing industries in May, added 231,000 jobs, and its unemployment rate fell to 13.7 per cent, from 17 per cent the country’s highest the month before.

Low-wage jobs rebound

Low-wage jobs were the hardest-hit in the first months of the lockdowns, but are now seeing the sharpest rebound, StatCan data shows. 

Jobs that pay less than two-thirds or the average wage, or less than roughly $24 an hour, shrank by 38.1 per cent in March and April, StatCan said, compared to 12.7 per cent for all other jobs.

But in May there were 6.7 per cent more of these jobs, compared to a 1.8-per-cent increase for all others.

U.S. surprise

The U.S. saw its unemployment rate fall to 13.3 per cent in May slightly lower than Canada’s as the country added 2.5 million jobs during the month.

That came as a surprise to experts, many of whom had feared another month of job losses in the millions, and predicted an unemployment rate as high as 20 per cent.

“These improvements in the labour market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic,” the Bureau of Labor Statistics said.

No country for young job-seekers

Canada’s youth face a brutal summer job season, Statistics Canada predicted, noting that 33 per cent of all jobs among people aged 15 to 24 have disappeared since the start of the pandemic, and that’s even with the rebound in May.

Returning students have lost nearly 40 per cent of all their jobs, and now have a 40.3-per-cent unemployment rate. Among non-student youth, it’s 25.1 per cent.

On the jobs front, “there is reason to think that the improvement can continue,” TD Bank senior economist Brian DePratto wrote.

“Most directly, because today’s data captured the employment picture as of May 10 to 16, it does not capture the recent re-opening measures in Ontario. The impact of the pandemic has been brutal, to say the least, but the worst may now be behind us.”