Skip to main content
economy
afterLoginCookieToGo:

A woman walks past a 'help wanted' sign at a retail store in Ottawa on Nov. 2, 2017.CHRIS WATTIE/Reuters

Canada may have hundreds of thousands more jobs to recover in the COVID-19 pandemic, based on payroll data that show weaker numbers than a better-known labour report.

Statistics Canada publishes two main gauges of employment each month: the Labour Force Survey (LFS) and the Survey of Employment, Payroll and Hours (SEPH). The agency publishes the LFS data more quickly, and its results are seen as significant enough to move the Canadian dollar and bond yields.

The LFS is also projecting a rosier version of the labour recovery. As of July, it suggested 92 per cent of pandemic job losses had been recovered, leaving employment down 1.3 per cent from February, 2020. The next report is out on Friday, for which the consensus estimate on Bay Street is a gain of 66,800 positions in August.

Canada adds 94,000 jobs in July as economy edges closer to full recovery

Why are millions still on COVID-19 income support? It’s complicated

For any given month, the SEPH’s data come out about seven weeks after those of the LFS, and thus the report typically doesn’t generate the same level of interest or headlines, let alone a market reaction. For much of the pandemic, however, it has consistently shown a weaker recovery. As of June, employment was down 4.5 per cent from when COVID-19 started.

The gap is tough to explain, although it’s partly due to design. For instance, the SEPH measures the number of employees receiving pay or benefits, and it excludes the self-employed and agriculture workers, among others. The LFS is a broader measure of who is employed based on responses in household surveys.

Still, when the LFS is adjusted to make it comparable with SEPH, a sizable gap remains. Based on numbers provided by Statscan, the adjusted LFS is down 2.7 per cent as of June. Ultimately, the country’s key job reports show a recovery that differs by about 300,000 positions, a sign of continuing stress in the labour market.

The payroll data “clearly does require us to temper our optimism” about the labour recovery, said Brendon Bernard, senior economist at hiring platform Indeed Canada. “To be really confident ... we want to see the collection of labour market indicators all showing solid signs of health.”

It’s not unusual for the two reports to move in opposite directions in a given month, although they trend similarly over time. The SEPH can have a lag effect. Because it’s essentially a measure of paycheques, if someone is hired in August but doesn’t get paid until the next month, they are not counted as employed until September.

Furthermore, the reports produce estimates – and their inputs are very different. The SEPH is derived from several sources, including payroll deduction records provided by the Canada Revenue Agency. For that reason, some economists consider the data more credible than the LFS, which is a survey of households.

On that front, collecting data has been a challenge in the pandemic. The response rate to the July LFS was 69 per cent, matching the number in December, 2020. (The monthly average in 2019 was 87 per cent.) For public-health reasons, Statscan has stopped doing in-person interviews, relying solely on phone and online collection.

Anna Maiorino, a spokesperson for Statscan, said in a statement it was “fully confident” in the data quality of both reports. “At this time, no decisions have been made regarding the reintroduction of face-to-face interviews.”

Mr. Bernard said he didn’t prefer one report over the other, viewing them as complementary. When LFS employment eventually surpasses its prepandemic level, “we really shouldn’t pop the Champagne and say, ‘Okay, recovery complete, everything’s back to normal,’” he said. “We know that one indicator is just one piece of the puzzle.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.