Canada’s economy lost 213,000 jobs in January, about five times more than what economists were expecting, as retail lockdowns forced more businesses to close their doors across the country.
Statistics Canada reported Friday that the jobless rate ticked up 0.6 percentage points to 9.4 per cent. That’s the highest level since August. Overall employment also fell to its lowest level since that month.
January’s drop means that overall, Canada now has 858,000 fewer jobs than it did in February of last year, before COVID-19 began. Another 529,000 people have managed to keep their job but are working less than they would normally because of the pandemic.
The figure for January was about five times what a consensus of economists polled by Bloomberg were expecting, which was for a slight loss of just over 40,000 jobs.
Almost all of the job losses came from Ontario and Quebec, which lost a combined 251,000 jobs — mostly in retail, accommodation and food services. That plunge was offset by slight job gains in Alberta, Manitoba, Nova Scotia and Prince Edward Island, while the jobs number held steady in British Columbia, Saskatchewan and New Brunswick.
Leah Nord with the Canadian Chamber of Commerce called January’s job numbers “unsurprisingly and unfortunately bleak.”
“We simply cannot afford to be in a holding pattern until vaccines arrive. We need new strategies to manage the pandemic [because] the economic costs may very well damage Canada’s economy and structurally alter our labour market in ways that may not easily be repaired.”
Reasons for optimism
Bank of Montreal economist Doug Porter said the numbers were dour at first blush, but he saw at least some reason for optimism below the surface.
The number of hours worked actually increased a little, despite the job losses, because the vast majority of the lost jobs were part-time. And some sectors actually expanded, such as construction, which was buoyed by comparatively mild weather. But “since then, winter has made an appearance, and those gains could reverse in February,” he said.
Ultimately, Porter took comfort in the fact that the job cuts were focused so much on one sector, and so much on just two provinces. “The fact that the job losses were so heavily focused on the restricted sectors in the two big provinces also means that the jobs could return quickly as restrictions ease.”
Economist Brendon Bernard with online employment market Indeed.com said that developments since January are already looking more upbeat, as viral case counts are falling just about everywhere.
“Meanwhile, after dipping to start the year, job postings on Indeed are trending back toward pre-crisis levels, suggesting a better outlook for job seekers. Throughout this crisis, the state of the job market has followed the path of the pandemic [and] all eyes are now on the vaccine rollout,” Bernard said.