LOCKDOWNS HALT CANADIAN JOBS RECOVERY.

Canada’s job recovery hit a snag in April as a third wave of lockdowns and COVID-19 restrictions led to fresh employment losses.

The country shed 207,100 jobs last month, Statistics Canada reported Friday from Ottawa, partially erasing large gains over the previous two months. Economists in a Bloomberg survey had predicted a drop of 150,000. The unemployment rate rose to 8.1 per cent in April, from 7.5 per cent a month earlier. The rate was below 6 per cent before the pandemic.

Despite the setback, analysts expect a quick rebound as early as June once containment measures have been lifted with the economy back on track toward full recovery — as was the case after previous lockdowns. The bulk of the losses were limited to pandemic-exposed sectors, like retail, food and accommodation, a sign that the slowdown isn’t broadbased.

“Today’s jobs data doesn’t change the structural backdrop for the Canadian economic recovery,” Simon Harvey, a senior foreign exchange analyst at Monex Canada, said by email.

Canada’s economy remains about half a million jobs shy of pre-pandemic levels. The Canadian dollar was little changed after the report.

The U.S. Labor Department also released soft jobs data Friday that were even more disappointing. U.S. payrolls increased by just 266,000, versus estimates for a 1 million gain.

Overall, Canada’s labour market has recovered more quickly than in the U.S. It’s one of the key reasons why the Bank of Canada has indicated it’s prepared to start paring back its stimulus before the Federal Reserve, though the soft jobs data on both sides of the border could prompt a rethink on the pace of withdrawal.

The Bank of Canada curbed its purchases of Canadian government bonds in April, and is expected to do so again in coming months as the recovery accelerates.

Rising virus cases due to a combination of rapidly spreading variants and a vaccine rollout plagued by delays and confusion prompted Canadian authorities in recent weeks to reintroduce strict containment measures that hit jobs in close-contact sectors.

Friday’s jobs numbers suggest a tough start for the nation’s economy in the second quarter. Hours worked — which is closely correlated to output — fell 2.7 per cent in April, the biggest monthly drop since the depths of the recession. April also saw the first drop in full time employment — down 129,400 — in a full year.

Still, the country has a strong track record of bouncing back after prior waves of the virus, bolstering confidence it will do the same again.