“The current soft patch in the Canadian labor market should turn out to be transient. The advent of effective vaccines against the COVID-19 virus late last year has boosted the confidence of Canadian enterprises as shown by the Bank of Canada’s Business Outlook Survey indicating higher hiring intentions. This suggests a solid rebound when the pandemic is brought under control.” (National Bank Financial, Feb. 5, 2021)

January represented the second month in a row that Canadian employment declined. Not surprisingly, the new restrictions that the various provincial governments imposed because of the pandemic accounted for the bulk of the job losses.

Photo by Hermes Rivera on Unsplash

According to the Labour Force Survey, 53,000 jobs were lost in December, followed by a huge loss of 213,000 jobs in January.

Canada’s unemployment rate increased to 9.4% in January, 3.8 percentage points above the unemployment rate in January 2020, while the US rate of 6.3% was only 2.8 ppts higher over the same twelve months.  

The data suggest that virtually all the jobs lost in January were part-time, though the definition of full versus part-time employment has less meaning than in the past due to the pandemic related lockdowns and the changed hiring patterns.

Note as well that most of the jobs lost in January were in service industries which were the most heavily affected by the pandemic recession. Indeed, retail & wholesale trade and hotels & restaurants alone recorded 242,600 job losses in January,

What emerges from all of this is that even though the latest job losses were heavily concentrated in the service sector, given the high COVID-19 numbers, improvements cannot be expected until the restrictions are eased and more of the vaccine is rolled out.

Indeed, as the following charts illustrate, the economic recovery from the pandemic has a long way to go simply to restore former employment levels.