COVID-19 job losses reach 3 million—easing expected
May 8, 2020for
Focus Area—Canadian Economics
The Conference Board of Canada’s Senior Economist, Cory Renner offers insights on May’s Labour Force Survey (LFS):
“Canada lost nearly 2 million jobs in April during the peak of the COVID-19 economic impact. This brings total job losses since February to 3 million, close to our late March forecast of 2.8 million. In all, employment has fallen 15.6 per cent since February. We expect the worst of the job losses are behind us and the labour market will slowly recover as restrictions are eased. While it’s troubling that job losses are concentrated in low wage industries, the CERB is a good income support for workers in these jobs. In all, the latest job report suggests that government programs have helped stem job losses in the country, which should foster optimism as we head into the recovery phase.”
- With the economy fully shut down in April due to COVID-19, Canada’s labour market shed nearly 2 million jobs. This is the largest monthly decline ever and brings the cumulative job losses (since February) to 3 million. In late March, The Conference Board of Canada estimated the economy would shed 2.8 million jobs, and so the numbers are in-line with our view.
- Looking ahead, employment levels should pick up slowly as provinces are easing restrictions on economic activity, which should bring people back to work in May.
- In April, the decline in full-time employment (–1.5 million) was significantly steeper than the decline in part-time employment (–520 thousand).
- The survey was conducted between April 12th and April 18th, and so the results represents jobs that were lost between the middle of March and the middle of April.
- The labour force declined by 1.1 million in April, which pushed the labour force participation rate down to 59.8 per cent.
- The large decline in both employment and the labour force means that the unemployment rate rose to 13 per cent, the highest since 1982.
- All provinces saw significant job losses in March. Job losses were most severe in the largest provinces; Ontario (–689,200), Quebec (–556,000), British Columbia (–264,700) and Alberta (–243,800). In percentage terms, Quebec (–13.5 per cent) saw the largest decline, while Saskatchewan (–9.4 per cent) saw the smallest drop.
- Job losses were steepest in the retail sector (–374,000), not surprising given that many retailers are closed across the country.
- Accommodation and food services shed 320,600 jobs in April as restaurants closed in in room dining and people stopped travelling. A mind boggling 50 per cent of people who worked in this industry in February are now out of work.
- The construction industry also saw significant job losses in April (–313,000) as many parts of this sector were deemed non-essential and were required to shut down.
- Other industries which saw major job losses are education (–267,100), other services (–143,000) and health care (–129,000).
- Our estimates suggested that job losses would be concentrated in low-wage industries, which is exactly what happened. As a result, the year-over-year increase in average weekly wages reached 12.3 per cent. This is well above the solid 4.2 per cent year-over-year increase in February. Of course, it should be taken with caution—the average wage increase comes from a change in job composition whereas total labour income is down over the past two months.