It only took four months to regain two-thirds of Canadian jobs lost early in the Covid-19 pandemic, but recovering the final third could take much longer, a report from TD Economics says.
Economies reopening after March and April lockdowns unleashed pent-up demand and led to rapid employment gains, said the report published Wednesday. More than 1.9 million of the 3 million jobs lost between February and April have been recovered.
But those gains have been concentrated in six industries, and certain sectors will likely continue to struggle as “pandemic-related uncertainty still fills the air,” it said.
School boards’ increased hiring ahead of the school year brought education employment to 98% of pre-pandemic levels, while consumer interest in furniture and building supplies helped the trade services industry regain almost 80% of lost jobs, the report said. Almost three-quarters of lost manufacturing jobs have also returned.
But “high-touch” sectors such as accommodation, food services, culture and recreation are experiencing a slower recovery, and agricultural employment has actually declined since April, TD said. This will lead to a slowdown in revenue growth for many businesses.
Pent-up demand is likely to dissipate in the near term as consumers “clutch their purses a little tighter” and both loan deferrals and emergency household benefits wind up, the report said. Lower-paying industries will be the hardest hit.
“Some jobs will not come back in these industries, meaning workers may have to look for jobs in other areas of the economy. This search period will take time, prolonging the labour market recovery,” the report said.
While fiscal programs will play a “crucial” role in supporting workers, the path of the virus will have the biggest impact on employment numbers. A surge in Covid-19 cases could lead to renewed restrictions, the report said, while a vaccine could boost employment growth.
“Much is uncertain. What’s less ambiguous though, is that this next phase could be the bumpiest in the labour market’s road to recovery,” it said.