Canada's Employment Recovery Ends In December, With 63,000 Jobs Lost

It was a good run while it lasted.

After seven straight months of job gains , Canada’s recovery from the spring lockdowns came to a grinding halt in December, according to Statistics Canada data released Friday.

The country lost 63,000 jobs last month, considerably more than the 27,500 economists had been expecting, on average.

Another measure of Canada’s economy the Ivey Purchasing Managers’ Index (PMI) shrank for the first time since May, convincing many experts that the economy as a whole contracted with the job market at the end of 2020.

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The job losses seemed to follow the same pattern as in the spring, where jobs in travel-related and “high-contact” service industries took the greatest hit. Canada lost 99,000 part-time positions, with youth aged 15 to 24 and aging workers, aged 55 and over, taking the brunt of the losses. 

“The sources of weakness were unsurprising, with declines in accommodation and food services and information, culture and recreation leading to the first drop in services employment since April,” CIBC economist Royce Mendes wrote in a client note.

“Hours worked across all sectors also fell for first time since April, adding evidence to our belief that the economy contracted in December.”

More job losses likely ahead

The numbers are a snapshot of Canada’s job situation in the week of December 6-12. That was after a number of provinces tightened restrictions amid rising COVID-19 cases, but doesn’t reflect the further restrictions that were announced later in December.

“It... does not capture the effects of the business closures imposed in Alberta from December 13, nor the more severe lockdowns imposed in Ontario and Quebec toward the end of the month,” Stephen Brown of Capital Economics wrote in a client note.

“All this leads us to think that the January labour force survey will show an even larger 100,000 fall in employment.”

At least so far, these losses aren’t on the same scale as what Canada saw last spring, when 3 million people lost their jobs and another 2.5 million saw their hours cut. Much but not all of that was recovered in the months that followed.

As of December, there were 636,000 fewer jobs in Canada than before the pandemic, StatCan said, and another 488,000 Canadians were working less than half their usual hours.