Quick Take

Labour market recovery goes into reverse in December

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

Rising COVID-19 cases through the late fall and into winter led to shutdowns across the country, which weighed on employment growth. In all, employment fell by 62,600 in December, the first decline in employment since April. With restrictions remaining in place or even being tightened into 2021, employment growth is likely to decline further in January and remain weak in the first half of the year. Despite the December decline, there was some positive news as job losses were mostly concentrated in industries directly affected by shutdowns, showing some resiliency in industries that remained open.

  • After decelerating in previous months, the jobs recovery went into reverse in December as employment fell by 62,600 in the final month of 2020.
  • This fall in employment is the first contraction of employment since April 2020 and is a stark reminder of the damage the second wave is now having on the Canadian economy. With more lockdowns since the survey was conducted between December 6th and 12th, employment is likely to decline further in January.
  • The unemployment rate crept up by 0.1 in the month of December, ending the year at 8.6 per cent. The participation rate fell by 0.2 per cent marking the second consecutive month of decline in the size of the labour force. The decline in the participation rate points to discouragement among the unemployed and the fatiguing effect of long-term unemployment.
  • British Columbia added 3,800 new jobs and was the only province that saw employment grow in December.
  • Among the Atlantic provinces, Nova Scotia saw the largest decline in employment, shedding 9,600 jobs and giving that province the distinction of having the largest drop in employment, by percentage, in all of Canada.
  • Elsewhere in Atlantic Canada, Prince Edward Island (-900), New Brunswick (-800) and Newfoundland and Labrador (-1,300) all experienced employment declines.
  • Employment fell marginally relative to population in Quebec (-16,800) and Ontario (-11,900). Employment declined for the third consecutive month in Manitoba (-6,600) and Saskatchewan (-6,700). In Alberta, for a second consecutive month, employment fell by 11,900.
  • Goods-producing industries saw employment rise in December, led by strong growth in manufacturing. This is a positive sign for the economy, as many goods-producing industries remain unaffected by closures, and thus show some resiliency in the broader economy.
  • There were also some positive signs in services-producing industries, with the holiday season leading to employment growth in both the retail trade and transportation and warehousing industries.
  • High paid services also saw employment growth in December, with financial services and professional services both seeing employment gains. Both industries are above pre-pandemic levels of employment and have been key to steering the economy through the pandemic.
  • As in April, it is the services that are related to in-person gatherings that have been heavily affected. Higher case counts and closures across the country meant that employment in the accommodation and food services (-56,700) and information and culture (-18,800) led the decline. These industries will also be more heavily affected going forward as more closures take place and will likely remain weak until a COVID-19 vaccine is widely distributed.

COVID-19: Get all the insights

Liam Daly

Liam Daly

Economist

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