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January jobs report: lockdowns lead to a loss of 213,000 jobs in Canada

Jessy Bains
·3 min read
Closed restaurant at a shopping mall during the second lockdown in Toronto during the novel coronavirus (COVID-19) pandemic in Toronto, Ontario, Canada on December 07, 2020. Ontario reported 1925 new COVID-19 cases today and 26 new virus related deaths, setting a new single-day record for daily cases reported in a 24-hour period since the start of the pandemic. (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images)
Closed restaurant at a shopping mall during the second lockdown in Toronto during the novel coronavirus (COVID-19) pandemic in Toronto (Getty Images)

COVID-19 restrictions took another devastating toll on Canada’s job market in January, as a far worse than expected 213,000 jobs were shed instead of the 40,000 economists expected.

Statistics Canada says losses were entirely part-time positions and concentrated in Ontario and Quebec’s retail sectors.

The unemployment rate rose 0.6 percentage points to 9.4 per cent, the highest since August 2020.

It’s the second straight month of jobs losses, following a loss of 63,000 in December.

As grim as the numbers sound, CIBC senior economist Royce Mendes notes they aren’t as bad as the first wave.

“In the grand scheme of things, the second wave has still been less destructive in terms of total economic damage than the the first. Last March and April the labour market shed 3 million jobs,” he said

“After recovering 2.4 million jobs between May and November, employment has only declined a combined 265K in December and January.”

Employment was down by 858,000 compared to February 2020 and Covid-related work absences were up by 529,000.

The hardest hit sectors

Accommodation and food services (-8.2%), retail trade (-7.4%), and information, and culture and recreation (-2.4%) were hit the hardest since they were most affected by health restrictions.

Stephen Brown, senior Canada economist at Capital Economics says it will take time for those sectors to heal but sees a broad recovery on the horizon.

“Employment should get a modest boost this month as students return to in-person learning and there will be further support in March thanks to hiring for the 2021 census,” he said.

“While there is also scope for employment in the high-contact service sectors to rebound as restrictions are gradually eased, the current slow progress with vaccinations suggests that employment is unlikely to rise strongly again until the second quarter.”

Falling behind the U.S.

On the other side of the border, the U.S. economy added 49,000 jobs and the unemployment rate dropped to 6.3 per cent.

COVID-19 vaccinations in the U.S. are further along than in Canada, which the Canadian Chamber of Commerce says will hold Canada’s recovery back.

“Looking forward, Canada must find new answers to managing COVID-19, such as implementing rapid testing and contact tracing as an additional layer of protection against the virus,” said Leah Nord, the Chamber’s senior director of workforce strategies and inclusive growth.

“We simply cannot afford to be in a holding pattern until vaccines arrive. We need new strategies to manage the pandemic. The economic costs may very well damage Canada’s economy and structurally alter our labour market in ways that may not easily be repaired.”

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

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