April 2021 – Canada loses 207,100 jobs

Last month, a third wave of lockdowns and COVID-19 restrictions have caused new job market losses.

According to Statistics Canada, the national economy lost 207,100 jobs in April, which partially offset strong increases seen during the previous two months. Meanwhile, economists polled by Bloomberg had expected a decline by 150,000.

The drop has led to an unemployment rate increase from 7.5% in March to 8.1% in April. The number hasn’t reached 6% before the pandemic hit.

Nevertheless, experts predict a fast rebound in June, as soon as the containment measures are lifted and the economy returns to its recovery path. We’ve seen the same scenario in case of the previous lockdowns.

The largest losses were reported in pandemic-exposed sectors, e.g. retail, food and accommodation. It means the slowdown isn’t spreading onto the entire economy.

“The recent results don’t change the structural backdrop for Canada’s economic recovery,” – noted Simon Harvey from Monex Canada.

The Canadian economy is still almost half a million jobs away from the pre-pandemic numbers.

The U.S. Labor Department also provided data on its job market, and they are even less optimistic, as the county created only 266,000 new jobs, while a million was expected.

“It’s quite a concerning day,” – says Frances Donald, global chief economist at Manulife Investment Management. In her opinion, the U.S.’s weak results mean Canada may face challenges soon, as it has trailed the U.S.’s growth path by 6-9 months.

In general, Canada’s labor market has shown a faster rebound than the U.S. That’s one of the main reasons why the Bank of Canada has signaled it’s ready to start reducing its stimulus before the Federal Reserve. However, such weak job results could make the BoC review its pace of reduction.

Last month, the central bank has already cut its purchases of Canadian government bonds, and many believe it will do it again.

“April will be a very weak month for the national economy,” – says Benjamin Reitzes from BMO Capital Markets. “Those who have expected the BoC to reduce the stimulus once again may want to review their forecasts”.