Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud
Today’s Labour Force Survey data shows the labour market continued to recover in September following the removal of COVID-related restrictions. Although the level of employment is now above its pre-pandemic level, the recovery remains uneven due to many industries with employment levels below their pre-COVID ones. Moreover, further job gains are needed to bring the labour market to where it should have been in the absence of the pandemic – specifically, a return of the employment rate and unemployment rate to their pre-pandemic levels.
The fourth wave of COVID-19 infections is an immediate risk to the outlook, as it could lead to renewed restrictions and another setback to the labour market recovery. However, high vaccination rates and the introduction of proof of vaccination in most provinces reduce the need for stringent restrictions. As a result, we believe that any restrictions are likely to be milder than in previous waves, resulting in a smaller impact on economic activity. Nevertheless, the situation continues to require close monitoring.
In Alberta, we saw another solid job gain in September and employment is now above its pre-pandemic level. However, a more acute fourth wave in the province is leading to a reduction in activity in the client-facing industry and could lead to an under performance of Alberta’s economy and labour market relative to the rest of the country.
Employment rose by 157.1k in September as the economy continues to reopen. With the gain in September, the level of employment is above where it was at the onset of the pandemic for the first time. As a result of the increase in employment, the unemployment rate dropped to 6.9% from 7.1%. This is the lowest level since the start of the pandemic, but still 0.9 percentage points higher than in February 2020. The participation rate rose to 65.5% from 65.1%, the same level its was before the pandemic. This suggests workers who left the labour force have come back looking for work. The employment rate, the share of the population holding a job, rose to 60.9%, the highest since the start of the pandemic but still 0.9 percentage points (pp) below its pre-pandemic level, suggesting there is still some recovery to get the labour market back to where it should have been in the absence of the pandemic.
The details show that most of the job gains in September were full-time (+194k), while part-time decreased (-19k). In addition, the job creation was concentrated in the private sector (+98k) and public sector (+78k), while there were some losses in self-employed (-19k).
On an industrial level, the increase in employment was mostly in the service sector (+142k), while employment in the good-producing sector increased more modestly (+15k). The strong gains in the service sector were expected, as the COVID-related restrictions mainly affected that sector.
The increase in the good-producing sector came after five consecutive months of decline. The details show that gains in manufacturing (+21k) and natural resources (+7k) were partly offset by losses in construction (-11k) and agriculture (-4k)
The gains in the service industry were relatively broad-based. There were strong increases in public administration (+37k), information, culture and recreation (+32.5k), professional, scientific and technical (+30k), finance, insurance and real estate (+27k), education (+21k), transport and warehousing (+18k), and business, building and other support (+17k). These increases were partly offset by declines in accommodation and food (-27k), other services (-6k), health care (-4k) and trade (-2k). The decline in accommodation and food services is surprising given the continued reduction in restrictions on the sector. However, Statistics Canada notes that some larger than usual seasonal patterns could be affecting the data.
Despite the gains in overall employment and that the overall level of employment is back above its pre-COVID level, only 6 out of 16 industries have a level of employment above their pre-pandemic level. These sectors are natural resources, trade, finance, insurance and real estate, professional, scientific and technical services, education, and public administration. Nevertheless, some sectors continue to lag behind the rest of the economy. However, with restrictions being eased significantly, the accommodation and food services is no longer the worst performing industry since the start of the pandemic (15% below its pre-pandemic level). Employment in the agriculture sector is currently almost 20% below its pre-COVID-19 level.
In Alberta, employment increased 19.6k in September. The level of employment is above its pre-pandemic level. Despite the strong job gains, the unemployment rate rose to 8.1% from 7.9%. However, the rise shouldn’t be a concern since it is due to workers who have left the labour force coming back to the job market. As a result, the participation rate increases to 69.7% from 69.0%, about 0.5pp below its pre-COVID level, suggesting that some workers who have left the labour force have yet to reenter the labour market. The employment rate, the share of the population holding a job, rose to 64.0%, its highest since the start of the pandemic but about 1.0pp below its pre-pandemic level.
Similar to the rest of the country, the job gains in Alberta were mainly in the service sector (+24k), while there was a decline in the goods-producing industries (-4k). The job losses in goods-producing industries were mainly in construction (+5k) and, to a lesser extent, manufacturing (-1.5k), while there were some small gains in agriculture (+1.5k) and natural resources (+1k).
The job performance in the service sector was relatively broad-based. There were gains in trade (+15k), public administration (+5k), health care(+5k), finance, insurance and real estate (+3k) and professional, scientific and technical (+2k). These gains were partly offset by losses in accommodation and food (-3k), education (-2k) and transport and warehousing (-1k)
Despite the job gains in August and overall employment being above its pre-COVID level, only 7 out of 16 industries have a level of employment above their pre-pandemic level. Those industries are: natural resources, trade, transport and warehousing, finance, insurance and real estate, professional, technical and scientific, education, and public administration. Employment in the accommodation and food services sector, the worst-hit industry, remains more than 24% below its pre-COVID-19 level, under performing the rest of the country.
On a regional basis, since the data is published on a three-month average basis, the numbers almost fully capture the recovery from the third wave (see below). Over the past three months, the province gained 1.6k jobs, but the performance was mixed regionally. Employment improved in Calgary (+3.8k), Edmonton (+0.7k), and Lethbridge-Medicine Hat (+0.7k), while it declined in Red Deer (-2.0k), Wood Buffalo-Cold Lake (-1.2k), Western Alberta (-0.9k), and Camrose-Drumheller (-0.1k).
Compared to the pre-pandemic levels, employment is the lowest in Camrose-Drumheller (-9.3%), Wood Buffalo-Cold Lake (-3.6%), Western Alberta (-2.3%) and Red Deer (-2.1%). Edmonton (+1.7%) and Calgary (+0.4%) are the only regions where employment is above their pre-pandemic level.
The unemployment rate for the province as a whole was unchanged at 7.9%. However, there were declines in Red Deer (-0.7pp), Western Alberta (-0.3pp), Calgary (-0.1pp) and Wood Buffalo-Cold Lake (-0.1pp). On the flip side, the unemployment rate increased in Lethbridge-Medicine Hat (+1.0pp), Camrose-Drumheller (+0.7pp), and Edmonton (+0.3pp). The unemployment rate is the highest in Camrose-Drumheller (9.1%), Calgary (8.8%), and Red Deer (8.2%). It is the lowest in Wood Buffalo-Cold Lake (5.4%), Lethbridge-Medicine Hat (5.6%), and Western Alberta (7.8%).
The employment rate improved in Lethbridge-Medicine Hat and Calgary but deteriorated in Red Deer, Wood Buffalo-Cold lake and Western Alberta.
The decline in the unemployment rate in Red Deer and Wood Buffalo-Cold Lake despite a reduction in employment is due to a decrease in the participation rate in these regions.
 All the numbers are expressed as three-month average of the non-seasonally adjusted number.
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