New COVID-19 lockdowns in the face of rising cases have broken Canada’s streak of of employment gains, with a loss of 63,000 jobs in December.
The unemployment rate is relatively unchanged at 8.6 per cent compared to 8.5 per cent in November. It peaked at 13.7 per cent in May.
“The sources of weakness were unsurprising, with declines in accommodation and food services and information, culture and recreation leading to the first drop in services employment since April,” said CIBC Capital Markets senior economist Royce Mendes.
“Hours worked across all sectors also fell for first time since April, adding evidence to our belief that the economy contracted in December.”
Part-time employment fell by 99,000, led by 58,000 jobs lost among youth aged 15 to 24 and and 27,000 for those aged 55 and older.
In December, 1.1 million Canadians worked fewer hours or were out of work — compared to 5.5. million in April. Over a quarter of Canadians worked from home, which unfortunately isn’t an option for most of the country’s battered sectors.
More job losses ahead?
The data reflect labour market conditions as of the week of December 6 to 12, which doesn’t include business closures in Alberta and more severe lockdowns in Ontario and Quebec in December. Because of this Capital Economics’ senior Canada economist Stephen Brown says it could have been worse.
“All this leads us to think that the January labour force survey will show an even larger 100,000 fall in employment.
Lockdowns could get even more severe, as cases reach record highs in Ontario, for example. Premier Doug Ford has warned even tighter restrictions than the current lockdown could be coming.
"We're in a desperate situation, and when you see the modelling, you'll fall out of your chair," Ford said.
"There will be further measures, because this is getting out of control."
Ontario is also mulling following Quebec’s lead with a curfew. B.C and Alberta have also extended COVID-19 measures.
Canada compared to the U.S.
The U.S. fared worse, also lost jobs for the first time since April with a decline of 140,000 in December. BMO senior economist Doug Porter says government benefits helped Canada.
“Canada's payroll support measures (i.e., CEWS) has likely played a big role here in the relative performance of employment compared with the U.S., especially with Canadian GDP falling much further in 2020 (Canadian Q4 GDP was likely down about 4 per cent y/y vs. a drop of little more than 2 per cent y/y stateside,)” he said.
“Note that a 332,300 y/y decline in accommodation & food services employment alone accounted for 58 per cent of the annual job loss.”
With that said, Porter notes that 2020 goes down as the worst year for Canada’s job market since 1982.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.