The other key data release will be Canada’s March employment report. Today’s US employment numbers were worse than expected but still far from reflecting the current status of the US labour market. Canada’s figures will be a bit timelier thanks to the survey being conducted a week later than the US’s (Canada’s covers the work week from March 16-20). Still the numbers won’t capture further deterioration in the labour market toward the end of last month. We expect next week’s data will show a whopping 1 million decline in the employment count and a startling jump in the unemployment rate to 10%. That’s based on reports that roughly 1 million Canadians filed for employment insurance in the survey week. With another 1 million filing in the following week (and more this week), the current unemployment rate is likely 15% or higher. One data point to keep an eye on will be the split between temporary and permanent layoffs. The US’s jobs report showed much of the increase in unemployment in March was tied to temporary layoffs, which should make for a faster economic recovery than if job cuts were permanent.
In terms of policy developments, next week should be a bit quieter in Canada with the federal government having now unveiled extensive support for both households and businesses, including a whopping $71 billion wage subsidy that leaves total commitments (excluding tax deferrals and lending programs) north of $105 billion. One gap that remains is measures to support larger firms in the most affected industries, like energy companies and airlines. Such a package is in the works but was further delayed this week, so we could see an announcement next week. Also important for the energy sector will be any global coordination on output cuts. Reports of a potential deal between Saudi Arabia and Russia to stop flooding the market with supply (in the middle of a demand shock) pushed oil prices sharply higher late this week. But a deal might require unprecedented cooperation from non-OPEC+ producers like the US, and potentially even Canada.
Finally, we’ll continue to keep an eye on coronavirus cases and whether extensive containment measures are having any success (see linked report for graphs). In Canada, confirmed cases are now in excess of 11,000 and while the trajectory of case growth has moderated it would be a stretch to say the curve is being flattened with the daily percent increase in confirmed cases still in the double digits. Canada is now well off the ‘gold standard’ for containment set by South Korea, though the country’s outbreak remains less severe than in Europe and the US. The latter remains on a troubling trajectory with confirmed cases rapidly closing in on 1/4 million. On a more positive note, containment measures in Italy (which have been in place for a longer period than in North America) are gaining traction and the country appears to be flattening the curve. Italy and the rest of Europe are still a ways, though, from being able to ease social distancing—a reminder that containment measures in Canada and the US aren’t going away anytime soon.
