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The Canadian March employment report released on Friday showed better-than-expected numbers. Analysts at MUFG Bank, point out Canada should not be claiming victory just yet, as more losses are likely in April.  

Key Quotes:

“As COVID-19 caseloads eased in the country, the sectors most affected by social distancing recovered strongly. Indeed, the wholesale/retail trade, accommodation/food services and information/culture/recreation segments accounted for roughly 58% of headline job gains in the month. It has to be said, though, that employment in the categories most affected by the pandemic remained 7.6% below its pre-crisis level in March. By way of comparison, total employment stood just 1.5% below that mark (that’s 296K jobs).”

“The participation rate improved markedly and stood just three ticks below its level in February last year. This compares favorably to the situation in the United States (where the participation remains a full 2.0% below its pre-crisis level, see chart on the right) and suggests that sidelined workers are making their way back into the labour force. The higher part rate in Canada might also be the result of the wage subsidy program put in place by the Federal government to prevent unwanted lay-offs.”

“As good as March’s LFS report was, Canada should not be claiming victory just yet. More job losses are likely in store for April as several provinces re-introduced strict social distancing rules to prevent the spread of the virus. With luck, this downturn should be limited to the month of April (and quite possibly May). After that, vaccination should allow the employment recovery to resume.”