Quick take

Canada’s labour market hit by third wave of COVID-19

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

Highlights of the April jobs report include the following:

• As expected, the tightening of restrictions in several provinces led to a fall in employment in the month of April. The total number of employed in Canada fell by 207,000, a decline of 1.1 per cent.
• Following two consecutive months of employment growth, the contraction in April pushed the unemployment rate up to 8.1 per cent.
• Job losses in the retail sector accounted for just over 40 per cent of the total jobs lost, with employment in the industry falling by 3.1 per cent. The deteriorating situation in Ontario underpinned this decline with the province issuing a stay at home order at the beginning of April due to a rise in COVID-19 cases and hospitalizations.
• Significant losses also occurred in the educational services sector, again these were concentrated in Ontario where schools returned, once again, to virtual classrooms.
• The impact of the third wave was felt across several service sectors which we have repeatedly seen fare the worst when restrictions are tightened. Principal among these is the accommodation and food services industry, which suffered a 6.4 per cent decline in employment, the largest of any industry in the economy. Similarly, in the other services industry, which encompasses non-essential services such as beauty salons and hairdressers, employment fell by 1.2 per cent.
• Elsewhere in the services sector, employment in the higher-wage industries such as financial and professional services increased, with remote work offering insulation against pandemic restrictions. 
• Among the goods-producing sectors of the economy there was far less movement this month. Overall employment inched down by 0.3 per cent as employment in the construction industry fell by 0.9 per cent, while manufacturing employment remained flat.
• Bar accommodation and food services, the agricultural industry, which posted a 1.7 per cent employment decline in April, remains the furthest from pre-pandemic employment levels.
• Employment remains roughly 40,000 below pre-pandemic levels seen in February 2020. This is likely due, in part, to the negative impact of the pandemic on the number of seasonal migrant workers entering Canada. The sector continues to struggle with significant labour shortages.
• Regionally, the nationwide picture in April was fuelled by losses in Ontario, which accounted for almost three-quarters of Canada’s job losses, a total of 152,700. British Columbia which has also been hit hard by the third wave saw employment fall by 43,100. Alberta shed 12,600 jobs, a number likely to increase as measures have since been tightened.
• In contrast, Quebec recorded a far more modest decline shedding just 13,000 jobs. While the province tightened measures at the end of March and maintained a curfew in several regions, the government has pursued a targeted approach to restrictions allowing stores, schools and some recreational establishments to remain open in certain regions, including Montreal.
• Employment rose in both Manitoba (+3,200), Saskatchewan (+9,500) and New Brunswick (4,100). The remaining Atlantic provinces all recorded small declines.
• The third wave has created a deteriorating situation in several provinces since the survey was conducted in April. Provinces such as Alberta will likely see heavier job losses in next month’s results. As the race to vaccinate Canada continues, as per our forecast, we expect the second quarter will see modest improvements in the labour market with the employment recovery picking up pace in the third quarter of this year.