Lockdowns walloped Canadian jobs market in January
“A jump in post-holiday COVID-19 cases, new restrictions on activity, and a shift to online schooling all led employment back down.”
Brendon Bernard Economist, Indeed Canada
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 parttime 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 StatsCan.
“The deck was stacked against the Canadian job market this January,” said Brendon Bernard, economist at job-search website Indeed Canada. “A jump in postholiday 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 COVID19 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, StatsCan noted that “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 on Friday’s figures. “Furthermore, it shows that the divergence between sectors is widening, with additional job losses in client-facing sectors, while industries, where working-from-home 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, StatsCan said. That number blew past the previous high seen in April of 5.1 million.
Another number that caught the eye of economists was that total hours increased last month by 0.9 per cent, even with the overall hit to employment. The increase was due to losses in those pandemic-struck sectors such as retail being “more than offset” by gains in construction, finance and public administration, StatsCan noted.
“Outside of those industries directly impacted by containment measures, job markets continued to improve in January,” Royal Bank of Canada economist Nathan Janzen wrote in a note. “All job losses were in part-time work, with full-time employment up slightly.”
Indeed’s Bernard noted that new COVID-19 cases have been declining and that postings on the site “are trending back towards pre-crisis levels,” which suggests that things are looking up for jobseekers.
The rough month for workers could still translate into tough sledding in the short term for the broader economic outlook. Longer term, however, could be a different story.
“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, senior Canada economist at Capital Economics.