Blowout jobs report signalling economic resilience in Canada

Bloomberg

Canada’s labour 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 pandemic.
The economy added 259,200 jobs in February, Statistics Canada reported 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 falls to 8.2%, lowest since beginning of 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 report should ease worries about widespread scarring in the labour market, and stoke expectations Bank of Canada will soon start tightening ultra-easy monetary policy. The central bank, which pledged not to raise record low interest rates before damage to economy is fully repaired, begun to put more weight on labour-market indicators as it gauges degree of monetary stimulus needed.
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 $80 billion in new spending over three years — said “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.”
The jump in employment in February nearly made up for all employment losses from prior two months, which suggests businesses are eager to rehire workers when allowed to reopen.

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 the 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 US 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 rises 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 labour underutilisation 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.