The initial quick recovery in Canada’s labor market is set to fade, with many of those initially displaced by the pandemic already back at work and the economy as open as it can be for now.

Canada’s economy added 250,000 jobs in August, according to the median forecast in a Bloomberg survey, which would mark a deceleration from 418,500 in July and 952,900 in June.

The latest numbers should capture the reopening of Toronto, Canada’s biggest city and one of the last to ease restrictions due to high covid-19 counts. If the August results are in line with forecasts, it would mean almost two thirds of the 3 million jobs lost in the first two months of lockdowns have been recouped.

But further advances may be harder to come by, as the labor market settles into what economists predict will be a long slog back to normal.

“The mechanical benefits from reopening are gone,” David Doyle, an economist at Macquarie Capital Markets, said by phone from Toronto. “There might be a little bit left in August but after August, you’ve restored the jobs you’ve been able to restore and that was the easy part of this.”

Full-time jobs accounted for almost 2 million of the total shed in March and April, double part-time losses, but have been slower to recover. May, June and July saw the return of 781,000 full-time positions, versus 880,000 part-time, pointing to a labor market improvement that may not be as robust as headlines suggest.

Some of the part-time gains are likely to be involuntary – an increased proportion of Canadians are working part time because of business conditions or they couldn’t find full time employment, Statistics Canada data show.

Two big risks for the recovery remain: the uncertainty around back-to-school plans and the onset of colder weather.

If governments can’t figure out a way to safely operate schools and day cares, more women may opt to leave the workforce, which would be a blow to economic growth, according to Armine Yalnizyan.

“You can’t juggle child care, home schooling and paid work,” Yalnizyan, a research fellow at the Atkinson Foundation, said by phone. “I guarantee you that as this thing continues, more women will be throwing in the towel.”

Another wild card is colder weather. It’s unclear if COVID-19 cases will rise when temperatures drop, but research shows being outdoors is the least risky option. That may keep people at home, instead of at indoor restaurants and shopping malls, until there’s a vaccine.

“Now that everything is legally allowed to reopen, but with this uncertainty and cloud of the pandemic still hanging over us, how easily will we be able to make up the remaining gap?” Brendon Bernard, economist at Indeed Canada, said by phone.

Canada is likely to see a bigger jobs bounce in percentage terms than the U.S. in August, partly because of the reopening of Toronto, according to Bank of Montreal Chief Economist Doug Porter. He predicts Canada added 375,000 jobs last month, equivalent to a 2.1% employment rise. That compares with a forecast for 1.5 million gain in U.S. payrolls, or a 1.1 percent rise.

“Most preliminary signs suggest spending and activity generally continued to improve notably from mid-July to mid-August,” he said by email, adding the consensus has consistently underestimated Canadian jobs in recent months.

“Probably after this one, though, the going gets tougher,” Porter said.


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