Canada’s job market snapped back in February, undoing nearly all the damage inflicted by the second wave of the COVID-19 pandemic.
The labour market added a net 259,200 positions in February, blowing past the consensus estimate of 75,000. The rapid gain coincided with an easing of health restrictions in several provinces and followed the loss of 266,000 positions in December and January. The unemployment rate fell to 8.2 per cent from 9.4 per cent, Statistics Canada said on Friday.
One year into the pandemic, the labour market has a long road to recovery. The number of employed people is down by 600,000. About 406,000 more people are working less than half their usual hours. And nearly half a million have been unemployed for longer than six months.
Still, the February results are the latest evidence that Canada’s economy is able to rally quickly as health conditions improve. This and other recent data indicate the economy has shown plenty of resilience over a challenging winter, which bodes well for the coming months if the pandemic is brought under control.
Friday’s results “reflect how well the economy can respond when virus cases are low and public-health restrictions are able to be relaxed,” said Royce Mendes, senior economist at CIBC Capital Markets. “The labour market has been more resilient [in the second wave], and less likely to exhibit some of the scarring that the Bank of Canada has been worried about.”
The partial reopening was apparent in Friday’s numbers. Quebec added 112,600 positions last month, while Ontario gained 100,300. The retail and hospitality industries combined for an increase of about 187,000 jobs, while the private sector did the bulk of hiring.
Given the industries involved, job gains were geared more toward part-time positions (171,000) than full-time work (88,200).
Employment also increased last month in British Columbia (26,600), Alberta (16,800) and Manitoba (16,200). Newfoundland and Labrador saw a decline of 15,000 positions as the province went into lockdown on Feb. 12. Other provinces had little change.
The labour underutilization rate fell 1.8 percentage points to 16.6 per cent, the lowest since the pandemic started. That measure takes into account the unemployed (mostly those available for work and looking), those who want a job but aren’t looking, and those who are employed but working less than half their usual hours due to COVID-19.
Still, Friday’s numbers were not entirely upbeat. The number of self-employed people fell in February, part of a weak trend. Over the past year, self-employment is down 7.4 per cent, compared to a 2.4-per-cent drop for employees.
“Even as we lift restrictions, it remains very difficult to be an entrepreneur,” Mr. Mendes said.
The pandemic has resulted in deeply uneven outcomes in the job market. For instance, employment in hospitality is down 26 per cent from a year ago, the largest hit by industry. Young women (age 15 to 24) account for nearly one-third of all job losses. And 110,000 fewer women are working in retail, whereas for men it’s little changed. Statscan said the gap was partly because women held more of the roles in retail, such as sales positions, that were affected by public-health measures.
The K-shaped recovery is plainly evident by wage bracket. The number of people earning $17.50 an hour or less has fallen 791,000 from a year ago, with women accounting for nearly two-thirds of the decline. Meanwhile, the number of employees earning more than $36 an hour has jumped by 410,000.
Looking ahead, March may bring another round of hiring. Toronto moved out of the province’s toughest lockdown phase this month, allowing more in-person shopping. “As restrictions ease, the biggest cities will add a further hiring impulse in March,” Derek Holt, head of capital markets economics at Scotiabank, said in a note to investors.
As ever, the path forward depends on keeping the virus in check. Broadly speaking, infections are ticking higher again after several weeks of improvement. Variants of concern are being detected more widely, raising the risk of tighter restrictions.
Beyond March, the outlook for jobs is “somewhat more hazy,” Sri Thanabalasingam, senior economist at Toronto-Dominion Bank, said in a report.
“As the vaccine rollout is only now beginning to accelerate, there is a chance that a third wave of the pandemic results in another round of restrictions, thereby slowing the labour market recovery.”
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