Canada’s job recovery is still a long way off: Bank of Canada – Update
By Kim Mackrael
The Canadian labor market still has some way to go in its recovery after employment returned to its pre-pandemic level last month, Bank of Canada Governor Tiff Macklem said Thursday.
Speaking to reporters at the International Monetary Fund and World Bank meetings in Washington, DC, Macklem said Canada saw strong job growth over the summer, including in the sectors who he said needed it most, such as high-contact services. However, he said the size of the workforce has grown during the pandemic and the employment recovery remains uneven.
Returning to pre-pandemic employment “is a big step, but it’s not the destination,” Macklem said. “It is still the case, however, that low-wage workers are well below their pre-pandemic level, while other workers have slowly recovered. So there is still room there.”
Statistics Canada reported last week that the Canadian economy created 157,100 jobs in September, a much larger gain than expected, bringing the level of employment back to where it was before the start of the Covid-19 pandemic. 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 October 27, Macklem said.
The jobs report offered another sign that the economic recovery is gaining momentum after a much weaker-than-expected second quarter. Canada’s gross domestic product contracted at an annualized rate of 1.1% during the period from April to June due to supply chain disruptions and a spike in Covid-19 cases , but should return to solid growth in the third quarter.
Speaking on Thursday, Mr Macklem said the central bank continued to anticipate a good rebound, although “it may not be as fast” as its July forecast, which predicted third-quarter growth at an annualized rate of 7.3%. Growth has been hampered by persistent challenges in global supply chains, he said, which have proven to be more complicated and persistent than policymakers anticipated.
He also reiterated some of his recent comments on inflation, saying that measures of medium- and long-term inflation expectations remain well entrenched and the causes of inflationary pressures remain narrow and tied to the circumstances of the pandemic.
Yet, Mr Macklem said, persistent supply bottlenecks mean that inflation measures “are likely to take a little longer to come down.”
Write to Kim Mackrael at [email protected]
(END) Dow Jones Newswires
October 14, 2021 19:49 ET (23:49 GMT)
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