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Canada’s Labor Market Suffers First Decline Since April

As a number of public health restrictions were tightened across Canada heading into the winter months, the country’s labour market fared poorer than expected.

According to the latest data released by Statistics Canada, Canada’s employment level dropped by 0.3%, as 62,600 jobs were lost in December — 25,1000 more than economists surveyed by Bloomberg anticipated. This is the first decline in job levels since April, causing Canada’s unemployment rate to increase by 0.1% to 8.6%. Although the country is in the midst of a vaccine rollout, uncertainty still remains, especially as new strains of the virus continue to be detected. Moreover, a number of provincial governments decided to extend holiday lockdowns in the face of rising Covid-19 cases, thus ultimately inhibiting prospects of a strong recovery continuation in the new year.

With no clear signs that the virus will dissipate anytime soon, a number of Canadians continue to work from home. At the height of the pandemic-induced economic turmoil in April, Statistics Canada reported that 41.6% of Canadians who worked at least half their usual hours reverted to working from home. As the labour market began to rebound during the spring and summer, that proportion dropped to 25.6% in September, before increasing again to 28.6% in December.

With employment levels becoming less optimistic in the new year, several sectors across Canada suffered further declines. Employment in the services-producing sector fell by 0.5% in December — the first such decline since April. Employment levels in accommodation and food services continued their declining trajectory for a third consecutive month, dropping by 5.8% in December. Likewise, the information, culture and recreation sector also suffered a hit for the second straight month, falling by 2.7%.

Employment in retail trade rose by 0.9% in December, bringing the sector 2.9% shy of its pre-pandemic level. Meanwhile, after two months of stagnation, employment growth in the manufacturing category finally resumed, rising by 0.9% in December. The continued increase in the final month of the year puts the industry’s national employment level on par with pre-pandemic totals.

Although the national employment level declined for the first time since April, labour market conditions across provinces remained mixed, mirroring varying public health restrictions. Employment fell in Nova Scotia, Saskatchewan, and Prince Edward Island, with Manitoba and Alberta suffering the worst employment contractions of 5.8% and 5.4%, respectively.


Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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