In March and April the Canadian economy lost 3 million jobs due to the coronavirus and the economic shutdown .

Since then the economy has restored some of the lost jobs, but as the following chart and table illustrate, the jobs recovery has a long way to go to reach former peak levels of employment.

Here is a recent snapshot of Canada’s job market since the coronavirus recession began.

As of July, total employment in Canada was 7% below previous peak levels. Of course, the initial employment decline was much steeper.Indeed, as of April Canada’s job market had already contracted by nearly 16%, so a jobs recovery of sorts has been underway in the job market. 

Based on the latest July employment figures, the service sector continues to record much higher job losses than the goods producing industries.

That is, in July employment in the accommodation and food services sector was 25% below February employment levels. As bad as this large number sounds, earlier in April the job losses in this sector were as high as 50%.

The next worse job loss sector was information, culture, and recreation, where employment in July was down 14% from its previous peak. 

Thus while the Canadian employment recovery continued on in July (the third month in a row), the jobs recovered between May and July represent only a fraction of the 3 million jobs which were lost in the previous two months. July employment levels were still 1.3 million below February peak levels.

Obviously, these heavy job losses are higher than the maximum losses suffered during Canada’s last recession in 2008-09.

We cannot count on a rapid recovery of the Canadian economy, back towards the more comfortable status quo which existed before the pandemic hit us all. 

After all, the COVID-19 pandemic is a global crisis without any recent parallels. We know that a global coordinated approach for propelling a recovery will be necessary, but given current circumstances, may not materialize.

Canada is a small, open economy with little external leverage on its trading partners. With respect to certain sectors of Canada’s economy, employment in such fields as travel, dining and entertainment may never return to pre-pandemic levels.

While the high technology information and communications sectors of the economy appear somewhat impervious to the pandemic, nonetheless these industries only account for about 5% of Canada’s GDP. 

A recent projection by BMO Capital Markets forecasted Canada’s GDP to contract by 6% this year — “by far the deepest annual decline in economic activity in the post-war era.” Canadian GDP growth was 1.7% in 2019. Canada’s economy is optimistically projected to rebound by 6% in 2021.

Nonetheless, the unemployment rate outlook for Canada remains extremely bleak. Canada’s average unemployment rate was 5.7% in 2019, which was close to a full employment measure. The Canadian unemployment rate this year is expected to average 9.5%, and barely decline to 8% in 2021. 

In the final analysis the key propellant behind the Canadian economy will be how well the US and the global economy recovers, and as well, how competitive Canadian industry will be in the next economic phase.