Blowout Jobs Report Signals Economic Resilience in Canada
(Bloomberg) -- Canada’s labor market roared back to life in February after authorities began lifting lockdowns, a striking sign of the nation’s economic resilience to the second wave of the pandemic.
The economy added 259,200 jobs in February, Statistics Canada reported Friday in Ottawa, well ahead of expectations for a 75,000 gain. It’s the first month of gains since November, when a new set of containment measures was implemented to curb a surge in Covid-19 cases. The unemployment rate fell to 8.2%, the lowest since the beginning of the pandemic, from 9.4% in January.
The numbers highlight how well Canada’s economy handled closures in December and January, fueling expectations for a strong rebound in 2021. The report follows stronger-than-expected quarterly output data that showed Canada averted the stall most economists had been anticipating over the winter.
“The big February jobs bounce is a pleasant surprise, reinforcing the broader theme that the Canadian economy fared better than widely expected in a challenging winter,” Doug Porter, chief economist at Bank of Montreal, said in a report to investors.
Friday’s report should ease worries about widespread scarring in the labor market, and stoke expectations the Bank of Canada will soon start tightening ultra-easy monetary policy. The central bank, which has pledged not to raise record low interest rates before damage to the economy is fully repaired, has begun to put more weight on labor-market indicators as it gauges the degree of monetary stimulus needed.
The yield on benchmark five-year Canadian government bonds shot up more than 10 basis points to 1.027% as of 1:24 p.m. in Toronto. That’s the first time they’ve been above 1% since early March of last year. The Canadian dollar also gained, with the loonie up about 0.5% to C$1.2472 per U.S. dollar.
Even if the surprisingly strong gains push monetary policy makers to act, fiscal supports will remain in place.
While lauding February’s strong job gains, Justin Trudeau -- whose government is preparing a budget that will include as much as C$100 billion ($80 billion) in new spending over three years -- said Friday “there are still far too many people for whom things continue to be really tough.” The prime minister added: “If that’s you, know that you’re not alone in this crisis. We’re here to help get through it and get back on your feet.”
Veronica Clark, an economist at Citigroup Global Markets, called the results “amazing,” noting that they beat even her optimistic estimate of 150,000 new jobs. She expressed confidence that accelerating vaccinations after a slow start would keep the hiring momentum going. “As long as there are no further hiccups there, it means more reopenings and a further return to normal,” she said in a BNN Bloomberg television interview.
While Friday’s jobs report surprised to the upside, there are still concerns around an uneven recovery with most of the job losses since last year concentrated in three industries -- accommodation and food services, culture and recreation and ‘other’ services including personal care. The March employment report may take on an even greater importance for the Bank of Canada since it will be the last set of jobs data before the central bank’s April policy decision.
The jump in employment in February nearly made up for all the employment losses from the prior two months, which suggests businesses are eager to rehire workers when allowed to reopen.
The strong result mirrors the U.S. payrolls report for the month, which exceeded expectations with an increase of 379,000 jobs, driven by reopening in the leisure and hospitality sector.
Even with the gain in February, employment in Canada is still 599,000 below pre-pandemic levels. There are also another 406,000 people working less than half of their usual hours, the agency said.
Part-time employment increased by 171,000 while full-time employment rose by 88,000 reflecting a sizable rebound in retail trade, food and accommodation industries as regions lifted holiday-related restrictions. Quebec and Ontario led job creation during the month after being responsible for much of the weakness in December and January amid the holiday lockdowns.
The accommodation and food services sector posted gains of 65,000, the report said, while retail trade employment rose by 122,000. Broadly, February’s employment gains were concentrated in lower-wage sectors that have been the hardest hit by the pandemic. Employment among youth rose by 100,000.
The labor underutilization rate, a measure that includes not only unemployed workers but those working fewer hours because of Covid-19, fell to its lowest level since the start of the pandemic.
Another positive sign in the report was that the number of long-term unemployed -- or people who have been out of work or temporarily laid off for 27 weeks or more -- dropped by 49,000.
Many industries have already fully recovered to pre-crisis levels. That includes educational services and professional, scientific and technical services that can operate remotely.
©2021 Bloomberg L.P.