E-Sight January 8: Canadian Employment Falls for the First Time Since April

It’s not news that the country has been dealing with an accelerating second wave of COVID-19 infections since the fall. Since October we have seen a gradual tightening of public health measures in an attempt to slow the spread of the virus. By last month, those measures started to directly impact the labour market.

Employment declined by 62,600 in December. The Labour Force Survey period was December 6 to December 12, and since the November survey, we had seen more restrictive public health measures put in place in Ontario, Alberta, Saskatchewan, PEI and parts of Nova Scotia while tight restrictions continued in Manitoba and Quebec.

The public health measures were evident in the industrial composition of job losses. Accommodation and food services; information, arts and culture and other services bore the brunt of the employment decline. Other services include businesses that were directly impacted by the pandemic such as hairdressers and beauty salons.

Given the industries that were affected last month, job losses were driven by part-time employment which declined by 99,000 with people aged 15-24 accounting for 54,000 of those part-time job losses.

The labour force participation rate fell for the second month in a row and with fewer people in the labour force, there was little change in the unemployment rate which nudged up from 8.5% in November to 8.6% last month.

During the large-scale lockdowns in April, a total of 5.5 million Canadian jobs were impacted with 3 million having lost their job and 2.5 million reporting reduced hours or absences from work due to the closures. As of December, 1.1 million Canadians remain impacted with employment down 636,000 since February and 488,000 working less than half of their usual hours.

Hours worked is a key measure we are watching on the health of our economy and this indicator fell last month for the first time since April. Hours worked were down 0.3% on the month and remain 5.3% below February levels. This is a deeper impact than the overall employment numbers which are down 3.3% from pre-pandemic levels. Clearly, even Canadians that have hung on to their job, many remain affected by a reduction in their hours worked.

Looking at the regional labour market impacts, there were job losses in Nova Scotia, Saskatchewan, Manitoba and PEI in December. Employment held steady in Quebec and Ontario but was down in Montreal and Toronto due to regionalized restrictions on activity. With both provinces entering a full lockdown towards the end of December, it is likely we will see more widespread impacts in Central Canada in January. Employment in Newfoundland and Labrador has returned to pre-pandemic levels—the only province to reach that milestone—while remaining furthest away in Alberta.

With the public health measures that were in place, our economic forecast did expect to see employment decline in December. And with measures further tightening since the December employment survey, we expect to see more job losses this month. The good news is that this is a temporary situation and conditions will start to improve after the second wave of infections is brought under control. Further details of our latest forecast will be available on Tuesday when we release our full economic outlook report.

Categories: Canadian Employment, E-Sight, Economics

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