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Canadian job losses could be peaking amid COVID-19

(Getty Images)
(Getty Images)

Friday’s jobs numbers for May won’t paint a pretty picture of the Canadian economy, but it’s not expected to be nearly as ugly as the previous two months.

April and March were record-breaking months for job losses. Over 3 million positions were shed. Some who kept their jobs saw their hours cut dramatically.

Many more people likely found themselves out of work in May, but not on the same scale as previous months.

“We expect Canada’s employment count will fall by another 300,000 in May (a tenth of the cumulative decline in March and April) while the unemployment rate, which has greatly understated the scale of labour markets slack, is expected to rise to 14% from 13% in April,” said RBC Economics in a note.

“Hours worked will continue to be a better indicator of labour market underutilization, having declined by 15% in both March and April.”

While there have been more than 8.3 million unique applications for the Canada Emergency Response Benefit (CERB) and more than $43.1 billion has been paid out, applications have slowed. Lockdowns have also eased, to varying degrees, depending on location.

“Applications for income support have slowed somewhat, but the pace still indicates that there were material job losses between the April and May survey periods,” said Royce Mendes, a senior economist at CIBC, in a note.

“That said, there was likely some job creation occurring during the month in sectors that have seen increased demand as a result of the pandemic and the related social distancing measures.”

Mendes says further reopenings could result in wild swings in the jobs numbers over the summer, but the wounds aren’t likely to heal for years.

“Longer-term, with many employee-employer relationships having been severed or businesses having closed, the unemployment rate will remain elevated even if the economy is able to completely reopen, and it could potentially take years to bring it back down to the levels which prevailed pre-crisis,” he said.

The May numbers could shortchange some of the hiring that occurred during the month, because of the period used to collect the data. Statistics Canada will use the period between May 10th and 16th.

An increase in COVID-19 cases could also skew the data.

“Another source of uncertainty is what happens to Canadians who were employed according to the April LFS, but didn’t work during the week likely due to COVID-related reasons, the ranks of whom have jumped by nearly 2.1 million since February,” said Brendon Bernand, economist at Indeed, in a note.

“Some of these workers might be among the first to be recalled, which won’t boost headline employment, while others might lose their jobs entirely.”

If job searches on Indeed are an accurate indication of job growth, seasonal positions that can allow for social distancing can be expected to get a lift.

“Standing out at the top of the list are job searches including ‘golf’, which have more than doubled as a share of Canadian job searches since early April. ‘Garden’ and ‘landscaping’ related job searches have also jumped as a share of activity, as have searches for ‘fruit picking’, which could potentially provide some relief for agricultural producers reporting difficulty finding workers,” said Bernard.

“Not only is relative search interest in these roles up since April, reflecting general seasonality, but it’s also higher than it was last May, when a wider range of job opportunities were available.”

Statistics Canada releases the May jobs numbers on May 7th at 8:30 a.m. EST.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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