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Canada: Employment Losses Extend to Second Month in January

  • Canada’s labour market lost 213k jobs in January, the second straight month employment has fallen (December: -53k). This left the level of employment 4.5% below its pre-pandemic (February 2020) level. Losses were once again concentrated in part-time positions (-225k), while full-time positions continued to see improvements last month (+13k).
  • Like employment, Canada’s labour force also saw a decline in January, shrinking by 88k. However, given the larger contraction in employment, the unemployment rate rose to 9.4%, up from 8.8% in December. This was the highest level since August last year.
  • January’s job losses were almost entirely concentrated in the service-producing sector (-236k). The industries hardest hit by the pandemic and associated restrictions saw the largest employment declines: accommodation and food services (-75k), retail trade (-160k), and information, culture and recreation (-17k). Meanwhile, goods-producing sectors gained 23k jobs in January, with the bulk of new employment concentrated in the construction industry (+39k). Manufacturing lost 12k jobs on the month.
  • On a provincial basis, Ontario (-154k) and Quebec (-98k) accounted for most of January’s employment losses. Tighter restrictions to combat the spread of COVID-19 took a heavy toll on retail trade and accommodation and food services employment in these two provinces. The only other province to see employment decline was Newfoundland and Labrador (-3k). All other provinces saw employment grow in January.
  • While the employment decline was steep, total hours worked increased by 0.9% in January. Gains in construction, finance, insurance, real estate and rental and leasing, and public administration more than offset the declines in other services as well as wholesale and retail trade.

Key Implications

  • Canada’s labour market picture worsened in January as job losses mounted. Compared to February last year, there are now 858k fewer jobs in Canada, with the greatest deficits in the industries hardest hit by the pandemic (i.e. food and accommodation services and information, culture and recreation).
  • January’s employment report also saw restrictions finally catch up to the retail industry. After posting gains throughout much of the pandemic period, retail employment took a tumble as the largest provinces levied tougher measures to stem the spread of the virus. Ontario and Quebec accounted for almost all of the decline in retail employment last month.
  • Looking ahead, the good news is that cases are trending down across the country, and provinces are contemplating gradually lifting restrictions. Alberta and Quebec will start loosening some measures this month, allowing for the recovery to get back on track. Still, the emergence of more contagious variants of the virus, and hiccups in the rollout of the vaccine, suggest that the road to full recovery remains a long one.
TD Bank Financial Grouphttp://www.td.com/economics/
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.

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