SPY383.63+6.93 1.84%
DIA315.24+5.66 1.83%
IXIC12,920.15+196.68 1.55%

DJ Canada Loses 212,800 in January -- 2nd Update

DJ Canada Loses 212,800 in January -- 2nd Update

· 02/05/2021 09:56

By Paul Vieira

OTTAWA--Canadian employment plunged in January, the second-straight month of job losses, as economic restrictions meant to contain a second wave of Covid-19 infections weighed on activity.

The bulk of the job losses were part-time positions, concentrated in retail trade, as most stores were ordered closed in the country's most-populous regions. Offsetting those losses were full-time gains in the construction sector, and hiring in financial services and health care. In fact, hours worked in January rose sharply, reversing a decline in December.

Canadian employment declined by a net 212,800 jobs in January on a seasonally adjusted basis, Statistics Canada said Friday. Market expectations were for a decline of 46,000 jobs, according to economists with TD Securities. January's drop was the biggest one-month decline since last April.

The unemployment rate rose in January from the previous month, to 9.4%, or the highest level since August. Expectations were for the jobless rate to rise to 8.9% from 8.8%. Using U.S. Labor Department methodology, Canada's unemployment rate was 7.6%.

Employment in Canada has declined by an average of 70,300 over the past three months. On a six-month basis, Canada has added an average 78,200 jobs per month.

With the January data, employment is now 4.5% below pre-pandemic levels. The labor-underutilization rate, or the proportion of people either unemployed or working fewer-than-usual hours, rose in January to 18.4%. That's well below a peak hit last April of 36.2%, but above the 11.4% pre-pandemic level.

The Bank of Canada had already signaled it expected the country's gross domestic product to contract in the first quarter, as the economy dealt with fresh measures aimed at stopping the spread of Covid-19, the new disease caused by the new coronavirus. The central bank does expect the economy to rebound thereafter, with growth for 2021 currently penciled in at 4%, although some private-sector economists have markedly stronger forecasts of a gain of 5% or more.

The employment report notes that the bulk of the job losses were concentrated in Canada's two biggest provinces, Ontario and Quebec, as they issued stay-at-home orders and curfews to contain what was exponential growth in Covid-19 cases. After peaking in early January, the seven-day average of confirmed Covid-19 cases in Canada has retreated sharply, and is now at a level last recorded in early November.

Authorities in parts of the country with strict restrictions have indicated they are mulling a loosening of the rules, although no timetable has been set. Canada's vaccination rollout has been plagued with delays and issues regarding the supply of doses, and badly lags the pace set in the U.K. and U.S.

"The current slow progress with vaccinations suggests that employment is unlikely to rise strongly again until the second quarter," said Stephen Brown, economist at Capital Economics.

Part-time employment in Canada fell 225,400 in January, whereas full-time jobs climbed by 12,600. Statistics Canada said hours worked in January climbed 0.9%, reversing December's decline of 0.4%. The agency attributed the gain in hours partly to a jump to the construction sector, which added nearly 40,000 workers in the month, as well as hiring in health-care and financial services.

"It is difficult to square the moderate increase in hours worked against significant job losses in January, even if they were largely part-time positions, but overall it suggests that headwinds to growth may not be as strong as initially feared," said economists at TD Securities.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

February 05, 2021 09:56 ET (14:56 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.