JOB LOSSES
Broader lockdowns darken outlook
OTTAWA — Canada lost more jobs than expected in December, Statistics Canada data showed on Friday, with economists and industry groups warning protracted COVID-19 restrictions across much of the country are darkening the outlook into the first quarter.
Canada lost 62,600 jobs in December, more than double analysts' expectations of a decline of 27,500, while the unemployment rate edged up to 8.6 per cent, in line with expectations. Employment remains 3.3 percentage points below pre-pandemic levels.
Statistics Canada said the unemployment rate in Nova Scotia was 8.6 per cent in December, up 2.2 percentage points from November.
Canada's new COVID-19 cases, meanwhile, now average 7,688 per day, forcing a number of regions across the country to impose harsher restrictions that experts say will further hit employment.
“As cases continue to reach record highs, the prospect of protracted lockdowns loom large over the first quarter,” said Leah Nord, senior director of workforce strategies at the Canadian Chamber of Commerce, in a statement.
“We believe that many of the rebound gains of the last seven months are at risk of being lost, signaling a potential return to darker times for Canada's labour market over the coming months,” she added.
Populous Quebec imposed a curfew earlier this week and extended existing lockdowns through to February, while Ontario on Thursday said it would keep most schools closed for an additional two weeks amid a partial lockdown.
The poor outlook for employment could put pressure on the Bank of Canada to further ease monetary policy, economists said. The central bank has said it could cut record low interest rates further if the economic situation worsens.
The Canadian dollar initially gave back some of the week's gain, dipping 0.2 per cent to 1.2713 per U.S. dollar, or 78.66 U.S. cents, while Canada's S&P/TSX composite index quickly fell 14.84 points, or 0.08 per cent, after notching a record high Thursday as investors bet on a global economic rebound.
The service sector, hit by fresh restrictions on retail, food services, fitness and travel, lost 74,000 jobs, while employment in the goods sector rose by 11,300.
“It's almost textbook, the decline was almost entirely in accommodation and food services, which lost almost 57,000 jobs,” said Doug Porter, chief economist at BMO Capital Markets.
Porter added that the overall decline was only a fraction of that in March and April, when broad national shutdowns led to more than three million job losses.
Part-time employment fell by 99,000 positions, while fulltime employment fared better, up by 36,500 jobs, Statscan said. Youth employment slipped in December, with employment of 15-24-year-olds remaining 10.5 per cent below pre-pandemic levels.
SOUTH OF THE BORDER
Meanwhile, the U.S. economy shed jobs for the first time in eight months in December as that country buckled under an onslaught of COVID-19 infections, suggesting a significant loss of momentum that could temporarily stall the recovery from the pandemic.
The plunge in nonfarm payrolls reported by the Labor Department on Friday was concentrated in the leisure and hospitality sector, with closures of bars and restaurants accounting for three quarters of the job losses. But with other industries including retail, manufacturing and construction performing better, that economy is unlikely to fall back into recession. Nearly $900 billion in additional pandemic relief approved by the government in late December will probably provide a backstop.
More fiscal stimulus is expected now that Democrats have gained effective control of the U.S. Senate, boosting the prospects for President-elect Joe Biden's legislative agenda. There is also optimism the rollout of coronavirus vaccines will be better co-ordinated under the incoming administration.
U.S. payrolls decreased by 140,000 jobs last month, the first decline since April, after increasing by 336,000 in November. The American economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic. Economists polled by Reuters had forecast 77,000 jobs would be added in December.
The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000. There were also decreases in private education jobs and government employment. But retail employment rose by 121,000 jobs. Factories hired 38,000 workers and construction payrolls increased by 51,000 jobs.
There were also gains in employment in professional and business services, transportation and warehousing, health care and wholesale trade industries.
The unemployment rate was unchanged at 6.7 per cent in December. It was, however, biased down by people misclassifying themselves as being “employed but absent from work.” Without this misclassification, the U.S. jobless rate would have been about 7.3 per cent.