Today’s double data release highlights the ongoing challenges facing parts of Canada’s economy. While some sectors continue to surge ahead others continue to be impacted by ongoing public health measures.
The Labour Force Survey conducted between January 10th and January 16 gives us the first glimpse of the impact of tighter public health measures in Central Canada. New public health restrictions came into force in Ontario on December 26th. In Quebec, new restrictions began on December 25th while the province imposed a curfew that took effect on January 14th. Meanwhile, restrictions on retail, in person dining and recreation facilities were ongoing in Alberta and Manitoba.
Employment fell 213,600 in January. While the overall drop was substantial, employment in many parts of the economy continue to recover. Employment in industries directly impacted by the public health measures all saw substantial declines while other sectors managed to post modest gains. It is the same story across socio-demographic groups where many of the workers affected were youth working part time, those earning below average wages and woman, particularly those with children.
By industry, employment declined in accommodation and food services, retail trade, and the information and culture and recreation industries—all industries directly affected by the public health restrictions. Meanwhile, employment rose in the goods producing sectors of the economy particularly, natural resources, utilities and construction. The news in the service sector wasn’t all bad with gains in professional services, financial services, public administration, health care and social assistance and transportation and warehousing.
By region, not surprisingly, most of the employment decline was concentrated in Ontario and Quebec. Employment in these two provinces fell by a combined 251,000. The only other province to see a decline was Newfoundland where employment fell by 2,700. While Newfoundland was previously the only province to surpass its pre-pandemic levels of employment, the province continues to struggle with the impacts of low oil prices. Despite its pandemic related recovery, unemployment in the province remains at the highest rate in the country. Outside of these three provinces, employment rose or held steady.
With January’s employment decline, the unemployment rate increased to 9.4 percent, up 0.6 percentage points from December. The jump in the unemployment rate would have been even worse if not for an increase in the number of people who stopped actively looking for work. If this group is included as unemployed, the unemployment rate would have risen to 12 percent in January. Even worse, if you add in those who worked less than half their usual hours, the share of the labour force that is under utilized increased to 18.4 percent. The number of people facing long-term unemployment, which includes people looking for work for more than 27 weeks, remained at a record high of 512,000.
Many of the job losses were concentrated in individuals with lower income and education levels. Employment fell 4.9 percent amongst individuals without a postsecondary certificate or diploma while it only fell 1.2 percent amongst individuals with post secondary. With the employment decline concentrated amongst those with lower wages, average wages in January increased 7.1 percent compared to one year ago.
Despite the large drop in employment this month, total hours worked increased by 0.9 percent as the employment decline was more than offset by increases in average hours worked in industries with job gains. This suggests that despite the drop in employment, there is unlikely to be a decline in overall economic activity in January.
The trade data also point to ongoing recovery in some sectors of the economy. Exports managed solid growth as exports of energy products soared. Outside of energy, the story is less rosy. Non-energy exports stayed relatively flat while imports declined, reflecting weakness in domestic demand.
Monthly Canadian merchandise exports climbed 1.5 percent in December as energy exports posted strong growth. In volume terms, exports expanded by a solid 0.5 percent. Energy exports increased 10.2 percent in December, after experiencing large declines earlier this year. Exports of crude oil were largely responsible for this increase. In line with rising oil prices, nominal exports rose 10.5 percent. Despite the boost to the category, energy export values remain $670 million below where they were at the start of the pandemic. For the year, energy product exports fell 36.5 percent, similar to the decline during the 2008-09 financial crisis.
Non-energy exports faired worse, rising just 0.1 percent. Exports of machinery, motor vehicles and consumer goods all saw declines. Exports of services also declined by 1.9 percent in December, likely reflecting new travel restrictions.
Imports fell 2.3 percent in December, their largest decline since May 2020. A decline in consumer goods was largely responsible for the drop in imports. Imports of clothing, footwear and textile products all saw substantial declines. With imports falling and exports rising, Canada’s trade deficit with the world shrank to $1.7 billion, the lowest deficit since June 2020.
Categories: Canadian Employment, E-Sight, Economics
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