MNI DATA IMPACT: Canada Jan Jobs -212.8K, Worse Than Feared

Canadian employment tumbled by 212,800 in January, more than four times what economists predicted as tougher Covid-19 lockdowns were imposed, government figures showed Friday.

The unemployment rate also jumped more than expected, to 9.4% from 8.8%, which is the highest since August in Statistics Canada's reports. Economists predicted 48,000 fewer jobs and 8.9% unemployment.

Weakness reflected the scope of the lockdowns that included a curfew in the province of Quebec and school closures in Ontario, including an 8.2% decline in hospitality jobs and a 7.4% drop in retailing. Part-time work fell 225,400 or 6.7% on the month.

Unemployment hit a record 13.7% in May and had been falling steadily until December. It was a record low 5.4% before the pandemic. The job market may remain soft for a few months as provincial governments imposed stricter closures at the end of last year, and are just easing up on some of them now.

The Bank of Canada has said those recent health closures will shrink the economy this quarter, while vaccine distribution will help improve growth over the medium term.

There was some resilience in the numbers and some provinces began opening up again in recent days. Total hours worked, which some economists see as a better proxy for GDP, rose 0.9% led by gains in full-time work and the construction, financial services and public administration industries.

The number of people out of work on on sharply reduced hours was 1.4 million, compared with a peak of 5.5 million in April of last year, Statistics Canada said.

Statistics Canada also reported Friday the merchandise trade deficit for December narrowed to CAD1.7 billion from CAD3.6 billion, the smallest since June. Exports rose 1.5% and imports declined 2.3%.

Other highlights from the jobs report:

• Compared with February 2020, employment was down 858,000 in January and COVID-related absences from work were up 529,000
• The number of long-term unemployed (people who have been looking for work or who have been on temporary layoff for 27 weeks or more) remained at a record high (512,000).
• The labor force participation rate—defined as the percentage of the population aged 15 and older who are employed or unemployed—fell 0.3 percentage points in January to 64.7%, the lowest rate since August 2020.
• Among Canadians who worked at least half their usual hours, the number working from home increased by nearly 700,000 to 5.4 million in January, surpassing the previous high of 5.1 million in April.