January 26, 2022

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Canadians brace for ‘worst jobs report’ in modern history

Trudeau was referencing the hotly anticipated release of the March employment data in Statistics Canada’s typically unspectacular Labour Force Survey.

Far from ho-hum this time around, the report will provide the most-prominent early indicator of Covid-19’s bite on the economy.

Canada, like so many countries around the world, has effectively shuttered huge parts of its economy as authorities scramble to limit the spread of the coronavirus.

The United States, for example, got an early taste of the labor market impact of Covid-19 in last Friday’s jobs report.

Americans will learn more about the extent of the damage Thursday with the government’s release of the weekly jobless claim numbers.

In Canada, the public has watched as job losses have piled up — at what experts say is an unprecedented pace.

“This is going to be the worst jobs report Canada has seen in modern economic history,” Frances Donald, global chief economist and head of macro strategy for Manulife Investment Management, told POLITICO on Wednesday. “It will be four to five times worse than any report we’ve seen.”

A consensus of forecasters is predicting March job losses to reach around 500,000 and for the unemployment rate to surge to 7.5 percent, Donald said. The jobless rate was 5.6 percent in February, near its 40-year low.

By comparison, the Labour Force Survey showed the job market added 37,600 full-time positions month-over-month in February — before the economic impacts of Covid-19 struck in Canada.

Looking to March, Donald said the level of deterioration Canada will see in a one-month period is what one might expect over a span of nine to 12 months during a recession.

“They will be in a sense, front-loaded,” she said of lost jobs, many of which she predicts will be recouped once the health crisis has passed.

“While these numbers are going to look devastating on the surface, we have to be mindful that this is a man-made recession driven by our desire to protect lives and health infrastructure. We pressed a pause button that will eventually be un-pressed.”

Early indicators suggest the employment hit will be significant. For example, the number of applications has soared for Canada’s employment insurance program and the federal government’s new emergency workers benefit, which came into force Monday.

A government official told POLITICO that between March 15 and end-of-day Tuesday, the number of claims for these programs combined had surged to 4.26 million — which is more than 11 percent of Canada’s entire population and around 21 percent of its workforce.

The Canadian job report Thursday will follow the U.S. numbers for March, released last Friday, that showed the American economy lost 701,000 jobs — its first drop since September 2010 — and saw its unemployment rate move up to 4.4 percent.

The data gathering for the U.S. report, however, ended March 12, which was before major business closures and orders for people to stay at home went into effect.

Canada’s report, by contrast, is expected to provide a clearer picture of what happened when the economic crisis really started to take hold.

The report Thursday will be based on data collected about the reference week of March 15 to March 21 — right as governments in Canada were starting to shut things down and pleading with the public to restrict movements.

The Labour Force Survey captures an image of the job market by asking a sample of around 56,000 households to answer questions about a one-week reference period each month.

“As luck has it, the survey is well timed to capture the start of the economic meltdown,” Miles Corak, an economics professor at the City University of New York’s Graduate Center, wrote recently on his blog about Thursday’s jobs numbers.

Corak, who advised the Trudeau government on social and employment policy a few years ago, wrote in a subsequent posting that he expected Canada’s unemployment rate to almost double between February and March — and may even climb higher.

“With even this being an understatement because the official survey preceded some of the more dramatic shutdowns that happened later in the month,” he wrote. “I’m suggesting that we are even probably close to 15 percent right now.”

Other experts are also expecting the numbers to only get uglier.

“Tomorrow’s LFS will provide a partial revelation of the tumult the crisis has wrought upon the Canadian labor market. The worst is yet to be revealed,” reads a memo addressed to Finance Minister Bill Morneau and published Wednesday by the C.D. Howe Institute think tank.

The memo was co-authored by economics professors Tammy Schirle of Wilfrid Laurier University and Kevin Milligan of the University of British Columbia.

They write that Thursday’s jobs report will be an “incomplete snapshot” because the reference week came as the pandemic’s disruption took place. Their focus in the numbers will be on finer details like “actual hours worked” to get a better sense of Covid-19’s impacts.

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