A record 1 million jobs were shed in March, twice the market consensus of 500,000. A total of 5.3% of the 19.2 million Canadian workers, unfortunately, lost their job. The COVID-19 outbreak and consequent health containment measures wiped out the equivalent of all the jobs created since the fall of 2016 (see chart). The number of Canadian unemployed and looking for work, 1.1 million in February, stood at 1.5 million in March, matching the highs of the 2008-09 recession.
Before this morning’s LFS release, the largest month-to-month increases in the unemployment rate registered during previous recessions ranged from 0.6pp to 1pp. Unfortunately, March 2020 now holds this poor record: the unemployment figure jumped by 2.2pp from 5.6% to 7.8%.
Without surprise, the soft spots are associated to services sectors heavily exposed to social distancing measures, like retail trade (-208,000), accommodation and food services (-294,000), education (-125,000) and information, culture and recreation (-104,000). Many of those are part-time jobs (-537,000) and low-paid jobs, which explains the 70-cent increase in the average hourly earnings to $29.
Also, the Google (NASDAQ:GOOGL) Mobility Report released last week for Canada matches the provincial job numbers released this morning (see table). Generally, the provinces with the most stringent social distancing measures and non-essential closures registered the most severe deterioration in job market conditions. In Quebec, total employment fell by 6% (-264,000). Total employment declined by approximately 5% in B.C. (-132,000), Alberta (-117,000), Ontario (-403,000) and Nova Scotia (-25,000). Manitoba, Saskatchewan and the Atlantic Provinces registered declines in the 2.5%-4% range. The unemployment rate stands in the 7%-to-8% bracket in Ontario, B.C. and Saskatchewan; and north of 8% in Quebec, Alberta and the Atlantic Provinces. Manitoba’s jobless rate figure is the lowest in the country at 6.4%.
Bottom Line: The March LFS report showed the worst deterioration in labour market conditions in a single month on record. April’s numbers are expected to reflect the meltdown observed south of the border. Indeed, this morning’s U.S. initial jobless claims showed that job losses tied to the coronavirus crisis reached 15 million so far, or 10% of total U.S. employment. The federal government in Ottawa also mentioned earlier this week it has received more than 4 million applications for financial support since mid-March.
This being said, there is light at the end of the (short) tunnel as the new number of COVID-19 cases is improving on the planet, a potential leading indicator of a positive turnaround in economic activity in the coming weeks and months. Also, companies appear to have furloughed more employees than announced permanent layoffs in this recession because they were forced to close, but only temporarily. Thus, unemployment is expected to fall rapidly as the shutdowns gradually end in North America as we are already observing in China.
Austria and Denmark will reopen small stores, parks and schools next week. Czech Republic and Norway have also plans to slowly ease lockdowns this month. Until some restrictions are lifted in Canada, several financial bridges and tax breaks announced by governments will contribute to support income and ease financial stress.
