Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud
*This report includes regional details for Alberta.
Today’s Labour Force Survey data shows the recovery in the labour market slowed in October. 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 having an impact on the labour market, with renewed losses in the client-facing sector. However, high vaccination rates and the introduction of proof of vaccination in most provinces reduces 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.
Alberta saw its first job losses since June largely due to a more acute fourth wave in the province. This was expected considering the under performance seen in real-time indicators of economic activity. The decline in the participation rate suggests some workers left the labour force, either because of concerns regarding the fourth wave or discouragement. Whether these workers return to the labour force will be important, especially considering the labour shortage faced by the province.
Employment rose by 31.2k in October as the economy continued to recover. The level of employment is currently slightly above where it was at the onset of the pandemic for a second consecutive month. As a result of the increase in employment, the unemployment rate dropped to 6.7% from 6.9%. 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 eased to 65.3% from 65.5%, slightly below the 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, edged higher to 61.0%, the highest since the start of the pandemic but still 0.8 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 October were full-time (+36.4k), while part-time decreased (-5.2k). In addition, the job creation was concentrated in the private sector (+69.5k), while there were some losses in self-employed (-38.2k) and the public sector was flat.
On an industrial level, the increase in employment was mostly in the service sector (+37.5k), while employment in the good-producing sector decreased (+6.2k). The continued gains in the service sector were expected, as the COVID-related restrictions mainly affected that sector.
The decrease in the good-producing sector continues a worrying trend in the sector where employment in the sector has been mostly flat in recent months. The details show that losses in manufacturing (-8k) and natural resources (-8k) were partly offset by gains in construction (+4k), utilities (+2.5k) and agriculture (+2.5k).
The rise in the service industry were mainly concentrated in trade (+80.5). There were also some increases in other services (+21k), information, culture and recreation (+15k), and finance, insurance and real estate (+7k). Those gains were partly offset by losses in accommodation and food (-27k), business, building and other support (-22k), and professional, scientific and technical (-22k). This is the second consecutive decline in accommodation and food services showing that the sector has been affected by the fourth wave of COVID-19 infections.
Despite the gains in overall employment and that the overall level of employment is back above its pre-COVID level, only 9 out of 16 industries have a level of employment above their pre-pandemic level. These sectors are natural resources, utilities, trade, finance, insurance and real estate, professional, scientific and technical services, education, health care, information, culture and recreation, 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 (17% below its pre-pandemic level). Employment in the agriculture sector is currently almost 20% below its pre-COVID-19 level.
In Alberta, employment decreased 9.0k in October. The level of employment is back slightly below its pre-pandemic level. Despite the job losses, the unemployment rate declined to 7.6% from 8.1%, only marginally above where it was at the onset of the pandemic. However, the decline is entirely due to workers leaving the labour force. As a result, the participation rate dropped to 68.9% from 69.7%. The employment rate, the share of the population holding a job, eased to 63.7%.
Similar to the rest of the country, Alberta saw job losses in the goods producing sector (-9k), while the service sector was flat. The decline in goods-producing industries was broad-based, led by natural resources (-4k) and agriculture (-2k).
The job performance in the service sector was mixed. There were gains in trade (+10k), public administration (+3k), business, building and other support (+3k), and professional, scientific and technical (+2k). These gains were offset by losses in accommodation and food (-10k), other services (-6k) and finance, insurance and real estate (-2k).
Despite the job losses in September and overall employment being close to its pre-COVID level, only 8 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, business, building and other support, education, and public administration. Employment in the accommodation and food services sector, the worst-hit industry, remains more than 34% below its pre-COVID-19 level, underperforming the rest of the country.
On a regional basis, since the data is published on a three-month average basis, the numbers capture some of the impact of the fourth wave (see below). Over the past three months, the province lost 2.1k jobs, with declines in all regions, except in Calgary (+10.4k). Employment declined the most in Western Alberta (-2.9k), Edmonton (-2.8k), and Lethbridge-Medicine Hat (-2.5k).
Compared to the pre-pandemic levels, employment is the lowest in Camrose-Drumheller (-10.9%), Wood Buffalo-Cold Lake (-5.4%), Western Alberta (-4.1%) and Lethbridge-Medicine Hat (-3.2%). Calgary (+1.7%) and Edmonton (+1.4%) are the only regions where employment is above their pre-pandemic level.
The unemployment rate for the province as a whole was unchanged at 8.0%. However, there were declines in Calgary (-0.6pp) and Red Deer (-0.3pp). On the flip side, the unemployment rate increased in Camrose-Drumheller (+1.1pp), Wood Buffalo-Cold Lake (+1.0pp) and Western Alberta (+0.3pp). The unemployment rate is the highest in Camrose-Drumheller (10.3%), Edmonton (8.2%), Calgary (8.0%) and Red Deer (7.9%). It is the lowest in Lethbridge-Medicine Hat (5.4%), Wood Buffalo-Cold Lake (6.5%), and Western Alberta (7.4%).
The employment rate only improved in Calgary but deteriorated elsewhere led by in Wood Buffalo-Cold Lake, Lethbridge-Medicine Hat, Western Alberta, and Camrose-Drumheller.
The decline in the unemployment rate in Red Deer despite a reduction in employment is due to a decrease in the participation rate in the region.
 All the numbers are expressed as three-month average of the non-seasonally adjusted number.
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