Second-wave lockdowns wallop jobs market in January
The COVID-19 pandemic and renewed public-health restrictions meant to contain it knocked Canadian employment back to summer levels in January, although an increase in total hours worked has economists seeing a silver lining in a still-difficult situation.
Statistics Canada reported on Friday that the country shed a worse-than-expected 213,000 jobs last month, with the losses entirely in part-time work and driven by hits to Ontario and Quebec’s lockdown-affected retail sectors.
January’s losses dragged Canada’s employment down to its lowest level since August, and came on the heels of the country dropping another 53,000 jobs or so in december. The unemployment rate worsened by 0.6 percentage points in January, rising to 9.4 per cent.
Last month’s decline also widened the gap to pre-pandemic levels of employment. The economy was still around 858,000 jobs short last month of where it was in February 2020, up from 636,000 in december, according to Statcan.
“The deck was stacked against the Canadian job market this January,” said brendon bernard, economist at job-search website Indeed Canada.
“A jump in post-holiday COVID-19 cases, new restrictions on activity, and a shift to online schooling all led employment back down.”
January’s job losses were a stark reminder that COVID-19 is still causing harm both physically and economically. The job numbers also highlighted the unevenness with which COVID-19 has struck the Canadian economy.
In particular, employment in lockdown-affected industries such as retail and food services was walloped. Meanwhile, Statcan noted “a number of industries with a high proportion of full-time employment,” such as finance, insurance and real estate, have bounced back to their pre-covid-19 levels of unemployment, and were relatively unscathed in January.
“The report provides further evidence that the second wave of COVID-19 infections is harming the labour market,” Alberta Central chief economist Charles St-arnaud wrote in a note. “Furthermore, it shows that the divergence between sectors is widening, with additional job losses in client-facing sectors, while industries, where working-fromhome is possible, are seeing continued gains.”
The number of Canadians who worked at least half their usual hours and worked from home increased by about 700,000 in January, to 5.4 million, Statcan said. That number blew past the previous high seen in April of 5.1 million.
Total hours worked increased last month by 0.9 per cent, even with the overall hit to employment. The increase was due to losses in pandemic-struck sectors being “more than offset” by gains in construction, finance and public administration, Statcan noted.
“Outside of those industries directly impacted by containment measures, job markets continued to improve in January,” rbc economist Nathan Janzen wrote. “All job losses were in part-time work, with fulltime employment up slightly.”
Indeed.ca’s bernard noted that new COVID-19 cases have been declining and that postings on the site “are trending back towards precrisis levels,” which suggests that things are looking up for job-seekers.
The rough month for workers could still translate into tough sledding in the short term for the broader economic outlook. Longer term could be different.
“While the slump in employment in January suggests GDP growth will slow sharply this quarter, the unexpected rise in hours worked supports our view that GDP will at least continue to increase, and the strength of hiring in those sectors not affected by the lockdowns bodes well for the longer-term outlook,” wrote Stephen brown, economist at Capital economics.