Quick Take

Big job losses in a few provinces overshadow progress elsewhere

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The Conference Board of Canada’s economist Liam Daly offers the following insights on January’s Labour Force Survey (LFS):

January’s labour force survey is a mixed bag. It contains some sobering numbers but also signs for cautious optimism. The decline in employment was almost entirely due to the closures in Ontario and Quebec, as other provinces labour markets fared well. Going forward, we expect the labour market’s performance will continue to be tied to public health measures, and that a full labour market recovery will have to wait until a vaccine is widely available.

  • As expected, strict public health measures in Canada’s two largest provinces led to a further decline in employment in January, adding a second consecutive month to the labour market downturn that began in December.
  • January’s employment contraction is significantly larger than December with total job losses of 213,000. January’s results mark the lowest employment level since August 2020.
  • Unlike December, where employment fell in all but one province, a far more polarized picture emerged in January with employment declines in just three provinces (Ontario, Quebec and Newfoundland and Labrador) driving a net loss at the national level.
  • As a result, the unemployment rate was pushed up to 9.4%, the highest level since August 2020. The number of individuals in long-term employment (27 weeks or more) reached a new high of 511,500.
  • Unsurprisingly, job losses were concentrated in the provinces of Quebec and Ontario where strict public health measures have been enacted. Quebec and Ontario reported respective job losses of 97,900 and 153,500. Aside from Newfoundland and Labrador, which shed 2,700 jobs, all other provinces saw employment gains in January.
  • Nova Scotia led the Atlantic provinces after showing the greatest decline in December, as employment increased by 7,800. New Brunswick (+1,100) and Prince Edward Island (+900) also saw their employment expand in January.
  • In Western Canada, employment rose in all provinces, most notably in Alberta, which added 20,800 jobs. Modest yet nonetheless welcome employment gains were recorded in Manitoba (+5,500), British Columbia (+2,800) and Saskatchewan (+2,200).
  • Employment rose by 2.8 per cent in the construction industry which was spared from full closure as Quebec and Ontario tightened COVID-19 restrictions.
  • However, employment declines were recorded in the other major goods-producing sectors of manufacturing and agriculture.
  • With non-essential stores forced to close in Quebec and Ontario at the end of December, employment in the wholesale and retail trade industry fell by 6.0 per cent in January, the first decline since March.
  • Employment in the accommodations and food services industry, which has been particularly impacted by the pandemic, declined for the sixth consecutive month in January with employment down 31 per cent on pre-pandemic levels of last February.
  • Remote work continues to be the salvation for several other service-sector industries, including public administration and financial services, both of which recorded above 1 per cent employment growth.
  • Employment in healthcare and social assistance grew by 0.7 per cent, bringing it to within one per cent of the levels recorded prior to the pandemic. Elsewhere, employment in education services declined by 0.9 per cent as COVID-19 disrupted the return to school after the holidays.
  • A welcome feature of this month’s employment numbers is the continued strength in the transport and warehousing industry, which was badly affected by the pandemic last spring but has since proved resilient.
  • As tight restrictions allow cases to fall in both Ontario and Quebec there is reason to be hopeful that January’s labour force survey results represent the peak of the job losses brough about by the second wave.
  • Nevertheless, there is still substantial ground to be recovered in several industries and new more-transmissible COVID-19 variants may delay the easing of restrictions which is fundamentally linked to the performance of the labour market.

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Liam Daly

Liam Daly

Economist

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