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A worker smooths concrete at a construction site in Toronto on Jan. 16, 2020.

Cole Burston/The Canadian Press

Canada’s labour recovery has stalled as rapidly rising coronavirus cases and new restrictions lead to a fresh round of layoffs.

The country lost a net 62,600 jobs in December, the first decline since April, Statistics Canada said Friday. The unemployment rate edged up to 8.6 per cent from November’s 8.5 per cent. With December’s backslide, about 636,000 fewer people are employed than in February, before COVID-19 escalated in Canada and damaged the job market.

The U.S. saw a reversal of its own, losing 140,000 jobs in December, a far cry from the expansion that economists had forecast. The country has recovered 56 per cent of its pandemic job losses, while Canada has recouped just shy of 80 per cent.

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The near-term outlook is rough. For its December report, Statscan surveyed households on labour conditions between Dec. 6 and 12. After that point, a number of regions ramped up their restrictions in a bid to get COVID-19 infections under control, while many children’s classrooms have gone virtual, disrupting the work lives of parents.

Friday’s report “just barely captures the tip of the iceberg in terms of the contraction in the economy,” said Royce Mendes, senior economist at CIBC Capital Markets. “Look for another set of job losses in January.”

Similar to last spring, the second wave is having an uneven impact on workers. Part-time employment dropped by nearly 100,000 last month, with young people aged 15 to 24 bearing the brunt of damage. Self-employment fell by 62,000 to its lowest point since February.

As expected, close-contact service industries are suffering greatly. Employment fell again in both accommodation and food services (56,700) and culture and recreation (18,800).

“The industry breakdown displayed almost a textbook response to the new restrictions,” said Douglas Porter, chief economist at Bank of Montreal, in a note to clients.

Statscan also pointed to continuing struggles for racialized groups. Southeast Asian and Latin American Canadians saw particularly large increases to their unemployment rates. Meanwhile, employment for Indigenous Canadians is down 7.8 per cent from February, compared with a 2.1-per-cent drop for the rest of the population.

Another troubling sign is that roughly 44,000 Canadians aged 25 to 54 left the labour force in December – the bulk of them women. On Thursday, Ontario extended at-home learning for most primary-school children, which threatens to have an outsized impact on mothers, as it did last spring.

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“We continue to see this gendered difference in the recovery,” said Armine Yalnizyan, an economist and fellow at the Toronto-based Atkinson Foundation. Poor employment numbers to come, she added, are “magnified by the failure to create safe school reopenings and prevent the collapse of child care.”

Nine of 10 provinces lost jobs in December, paced by a drop of 16,800 in Quebec. British Columbia eked out a small gain of 3,800 positions. After new restrictions came into effect, employment in the Toronto area fell by 52,200. Over all, Ontario dropped by a more muted 11,900 positions. The entire province moved into a partial shutdown on Boxing Day, all but ensuring weakness in January’s report.

Conversely, there were also points of strength. Full-time jobs climbed by 36,500 in December, while a number of industries – such as manufacturing (15,400), professional services (16,800) and public administration (13,700) – registered hefty gains of their own.

As coronavirus cases rise, more workers are migrating back to the home office. The number of Canadians working from home rose by roughly 200,000 in December to 4.8 million. Of that group, 2.8 million people normally don’t work from home.

Despite a winter chill for workers, the second wave isn’t having nearly as large an impact as the first. For starters, more industries are permitted to stay open. Moreover, government programs to support businesses – including wage subsidies to keep people on the payroll – have been in place for months.

Mr. Mendes noted that the job market could begin to turn a corner in February or March, with momentum picking up by the summer. The outlook, however, depends greatly on getting virus cases under control and speeding up the vaccination rollout.

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“Obviously, the economy is in a rough patch at the moment,” he said. “The hope is that we can speed up the pace of vaccination, and … that should start to flow into economic activity, and by extension, hiring.”

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