Canada's Jobs Recovery Has Further to Go: Bank of Canada -- Update

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By Kim Mackrael

 

Canada's labor market still has further to go in its recovery after employment returned to its prepandemic level last month, Bank of Canada Gov. Tiff Macklem said on Thursday.

Speaking with reporters from the International Monetary Fund and World Bank meetings in Washington, D.C., Mr. Macklem said Canada saw strong jobs growth over the summer, including in sectors that he said needed it most, such as high-contact services. However, he said the size of the labor force has grown during the pandemic and the jobs recovery remains uneven.

Returning to the prepandemic employment level "is an important milestone, but it's not the destination," Mr. Macklem said. "It is still the case though that low-wage workers are well below their prepandemic level, whereas other workers have slowly recovered. So there still is some space there."

Statistics Canada reported last week that the Canadian economy added 157,100 jobs in September, a much larger gain than anticipated, bringing the employment level back to where it was before the Covid-19 pandemic began. The unemployment rate fell to 6.9%.

The central bank will provide a more detailed assessment of the labor market when it releases its next monetary policy report on Oct. 27, Mr. Macklem said.

The jobs report offered another sign the economic recovery is picking up after a much weaker-than-expected second quarter. Canada's gross domestic product contracted at a 1.1% annualized rate in the April-to-June period amid supply chain disruptions and a spike in Covid-19 cases, but is expected to return to solid growth in the third quarter.

Speaking on Thursday, Mr. Macklem said the central bank continues to anticipate a good rebound, although "it may be not quite as fast" as its July forecast, which anticipated third-quarter growth at a 7.3% annualized rate. Growth has been hampered by continued challenges with global supply chains, he said, which have proven to be more complicated and persistent than policy makers had expected.

He also reiterated some of his recent comments on inflation, saying measures of medium- and long-term inflation expectations remain well-anchored, and the causes of inflationary pressures remain narrow and linked to the circumstances of the pandemic.

Still, Mr. Macklem said, persistent supply bottlenecks mean that measures of inflation "are probably going to take a little longer to come back down."

 

Write to Kim Mackrael at [email protected]