Canadian employment -- an unsurprising setback

Canada lost 213,000 jobs in January, according to data published today by Statistics Canada. Adding in a 53,000 job loss in December (a smaller loss than originally reported), , today's numbers bring the total level of employment to its lowest level since August 2020. Correspondingly, the unemployment rate is up 0.6 percentage points at 9.4 percent, the highest level since that same month.

The loss of jobs can be entirely blamed on the COVID pandemic and the restrictions imposed by Provinces to combat the second wave.  It's striking to note that the two most populous Provinces, Ontario and Quebec, more than fully accounted for the losses, shedding 251,000 jobs between them. Outside those Provinces, only Newfoundland and Labrador lost jobs in January: the seven remaining Provinces all saw modest job gains. 

The job losses were entirely concentrated in part-time work, with 225,000 such positions lost in the month, with a startling 153,000 such positions lost in Ontario and a further 93,000 in Quebec.  This reflects the prevalence of this type of employment in the sectors most affected by the latest COVID restrictions: accommodation and food services and retail trade both saw significant job losses.

Outside the sectors hardest hit by COVID restrictions, there were some surprisingly positive elements to the report. Despite the sharp fall in part-time employment, total hours worked across the economy actually rose 0.9 percent in January.  The construction industry gained 39,000 jobs in the month, mainly in Alberta and Quebec. This may reflect seasonal adjustment issues, with the winter weather across Canada much gentler than usual so far this winter. More broadly, StatsCan notes that in a number of sectors characterized mainly by full-time employment, including professional services, finance and leasing, employment has now recovered to its pre-pandemic level. 

Today's data point to a very weak economy at the start of the year. Indeed, the drop in employment in December must cast doubt on StatsCan's preliminary estimate that GDP actually edged higher in that month.  With new COVID cases declining across the country, Provinces are starting to talk about cautious re-opening of their economies, but the excruciatingly slow rollout of vaccines means that this process will have to be undertaken with great caution. Both employment and GDP are likely to remain stagnant at best until well into the Spring.