- Well I think, Anthony, it's still a little bit of a mystery. We saw a lot of hiring that happened during the pandemic because of the online shopping or for delivery. And so as the economy reopened, there's less need for these types of workers, and so that could have been a reason why we saw some declines in those areas of the economy.
And then when we also think about areas such as manufacturing and construction, where there have been shortages of inputs, this means that there's less demand for workers in itself as well for, again, construction and manufacturing sector. So these factors could have played a role that resulted in this big miss this morning.
- And you mentioned shortages because I want to talk a little bit about what appears to be a gap between the surging job openings in the US and the millions that are still unemployed. Why is this happening?
- Well, I think an important reason is the pandemic itself. So we've seen the economy reopen. Businesses are ramping up, and they're in need of workers. But at the same time, because the pandemic is there, it could be leading to some workers choosing to remain on the sidelines and not enter the labor market, especially in those areas where they could be at higher risk of catching the virus.
And at the same time, you're getting this sort of fiscal support. So your income supports, and with those, those people are still able to sustain themselves, so they could afford to remain on the sidelines for a little bit longer. But these are temporary, and at some point, they'll have to re-enter, and then we will see that labor supply and demand start to converge again.
- So does this set us up for a bigger jobs number next month or the following month?
- I think so. So right now we did see, as we had mentioned, demand for labor increase, and we know that there's these temporary factors at play that are keeping hiring a little bit depressed. So in the coming months, as fiscal stimulus comes and hits other areas of the economy and the vaccination ramp up continues, we should start to see hiring also accelerate in the next month or two.
- OK so let's switch over to Canada, where we also released our April jobs numbers, and we saw higher-than-expected job losses, just over 200,000 in April. Again, much worse than expected. What do you read from this?
- Well, this was not surprising. We did see restrictions in large parts of the country because of the third wave of the pandemic. And what we've noted with employment is that it moves at the whims of restrictions and the pandemic itself. So in April we saw Ontario, BC, Quebec impose restrictions, and as a result, we also saw job losses, especially in areas like retail, which accounted for 40% of the decline for the month.
- And so far the market reaction has been relatively mild to this bad news. Do you think that this takes the pressure off both the US Federal Reserve and the Bank of Canada from raising rates sooner than expected?
- Well, I think in terms of both central banks, it means that the economy is not really out of the woods yet. There is going to be the volatility that comes from the pandemic and associated restrictions. So this is, again, just one data point, but it does give them some reason to think about how the labor-market recovery could unfold.
And so they'll be watching this quite closely, and I think this is a pretty crucial time in terms of the recovery itself with the vaccinations ramping up because there's still a lot of uncertainty of how this recovery is going to take hold over the next couple months.
- So bottom line, what do these job numbers tell you about the path to recovery?
- Well, I think that it means that there's going to be near-term volatility, and that's going to be as a result of the pandemic and how that evolves. But over the longer term, we hope that vaccinations gain the upper hand on the virus, and that sets us up for a pretty robust recovery through the second half of the year.
- Sri, thank you very much for your time.
- Thanks, Anthony.