Fewer January job losses seen in forecast survey
Bulk of damage concentrated in a few sectors
Job losses in Canada probably slowed last month in another sign the nation’s economy is handling the current wave of lockdowns better than it did last year.
Statistics Canada is expected to report a 40,000 employment decline on Friday, according to the median forecast in a bloomberg survey, less severe than the 52,700 jobs lost in december.
While the recovery has clearly stalled due to new restrictions, job losses this time around have been nowhere near levels seen last March and April, when employment fell by 3 million. That’s despite what has been a second wave of serious crack downs.
“The economy outside of the sectors directly affected by the virus has shown remarkable resilience,” royce Mendes, an economist at Canadian Imperial bank of Commerce, said by email. “The second wave had less of an effect on the economy and jobs than the first wave as governments, businesses and individuals all adapted.”
Since december, Ontario has implemented a stay-athome order while Quebec imposed a curfew. both provinces — the country’s two largest — had largely shut down non-essential in-person shopping during the month.
Mendes is predicting a loss of 50,000 jobs in January. Forecasts in the bloomberg survey range from -10,000 to -300,000, though only one of the 17 estimates is for a decline of greater than 100,000.
To be sure, Canada has a long way to go before a return to normal.
While the labour market has recovered about 80 per cent of lost jobs, employment is still down 646,000 compared with February.
yet, the bulk of the damage is concentrated in a few sectors. Just over 400,000 of the jobs lost since February are in accommodation, food or recreation. These sectors were also responsible for the employment decline in december.
For almost half the industries tracked by Statistics Canada, employment has already surpassed pre-pandemic levels.
“We believe that much of the damage in restaurant jobs from the renewed restrictions had mostly already made their mark in the december report, although there could be some further damage in January,” doug Porter, chief economist at BMO, said by email. Porter predicts a 10,000 loss in January.
A recovery in resource sales amid rising commodity prices could produce an upward surprise in January.
The second wave had less of an effect on The economy and jobs.
That industry was one of the reasons why Canada’s economy showed surprising strength in the final two months of 2020, according to GDP data released last month.
Another wild card is retail, which was largely shutdown in many regions.
“I would expect because these restrictions hit the retail sector a lot harder, we would start to see some job losses there,” Sri Thanabalasingam, an economist at Toronto-dominion bank, said by phone.
Thanabalasingam is predicting 84,000 job losses for January.
The major forecast outlier is Montreal-based desjardins Financial Group, which is estimating a 300,000 loss.