By Erik Hertzberg, Theophilos Argitis and Shelly Hagan
The drop in employment adds to the 1 million decline in March. The jobless rate jumped to 13% in April, the agency said Friday in Ottawa. Economists were anticipating a loss of 4 million jobs last month, with the unemployment rate rising to 18%.
The data provide the most complete picture yet of how nationwide lockdowns are affecting the Canadian economy, which has been hammered by two shocks — the Covid-19 pandemic and tumbling oil prices that have devastated the energy sector.
“By any standard other than the forecast consensus, April was a disaster for Canada’s job market,” Avery Shenfeld, chief economist at CIBC World Markets, said in a note to investors. “Being so far beyond what we’ve seen in past recessions, its tempting to call this a depression, but that’s not an accurate depiction given that many of these job losses are temporary. “
Bloomberg first reported the 2 million job loss figure earlier Friday. The Canadian dollar gained on the news, and was trading 0.2% higher at C$1.3949 per U.S. dollar at 9:50 a.m.
“Canadians should be confident that we will do whatever we can to ensure that their jobs are safe as we continue to fight the global Covid-19 outbreak,” Finance Minister Bill Morneau said in a statement after the release of data.
While the employment drop was less than expected, the underlying details remain grim. The number of people who were employed but worked less than half their usual hours has increased by 2.5 million over the past two months.
The number of workers who were either not employed or working substantially reduced hours is at 5.5 million, or more than one quarter of February’s employment level. And the unemployment rate jumps to 17.8% when adjusting for people who recently lost jobs but aren’t looking for work due to Covid-19.
“Economic activity should rebound in May as social distancing measures are gradually lifted across the country, but significant slack in the labour market is here to stay for some time,” Matthieu Arseneau and Kyle Dahms at National Bank Financial wrote in a note. “Even if the confinement measures are mostly lifted, more than a fifth of total employment is in industries facing significant challenges ahead.”
The widespread business shutdowns and strict social distancing measures hit vulnerable workers the hardest. Young people, immigrants, lower-income and non-unionized workers have seen disproportionately large drops in employment.
While women accounted for most of the job losses in March, the April report shows a more even distribution. Also, the goods-producing sector lost a significant number of jobs after holding up in March. This shows multi-week business shutdowns have disrupted industries across the board.
But Friday’s numbers suggest government measures are working to cushion the blow.
A new wage subsidy program is expected to entice companies to bring back some workers, while provinces have begun outlining plans to reopen parts of the economy to allow more businesses to operate in the coming weeks.
About 7.6 million Canadians — or more than one-third of the pre-crisis labor force — have applied for benefits under the Canada Emergency Response Benefit, which pays recipients C$2,000 ($1,430) per month.
The government allows people to earn as much as $1,000 a month while still drawing the benefit, which may have kept more people employed than anticipated, the person said.
Also on the brighter side, about 5.8 million people who didn’t work expected to return to work, the agency said.
And job-posting data suggest the labor market carnage may have plateaued. While postings are down significantly on a year-over-year basis, they started to level off toward the end of April, figures from Indeed Canada show. Another strong signal is that the number of people seeking income benefits seems to have peaked.
Yet, it’s unclear how quickly the economy will recover given the unprecedented scale of the downturn and the anxious mood among consumers. A recent survey found more than one in three Canadians anticipate spending less on discretionary items than they did pre-crisis, even after lockdowns lift.
Canada relies more heavily on small and medium-sized businesses that are less resilient to a shock this size.
“We’ll have to wait to see if April marks a low-point for the labour market as provinces gradually re-open their economies,” wrote Indeed Canada economist Brendon Bernard. “As with daily life, it will be difficult for the job market to return to normal until the pandemic is firmly in the rear-view mirror.”