Recent jobs reports have left some Canadians feeling out in the cold, especially when comparing numbers to our neighbors in the United States. However, as the initial shock of the Feb. 4 Canadian jobs report wears off, it’s clear that Canada is still firmly on the road to strong economic growth in 2022 and is still in step with the United States.
South of the border, the United States added 467,000 jobs in January, exceeding all economists’ projections. Canada’s employment report, meanwhile, showed a net loss of 200,100 jobs over the same period.
While seemingly disappointing for Canadians, these figures are not surprising because Ontario and Quebec closed in-person dining and entertainment for most of January in response to the spreading omicron variant. Other provinces drastically reduced gathering limits. While more workers returned to remote work in January, the measures in the United States are much less strict.
Fortunately, Canada’s employment levels remain above the pre-pandemic baseline of February 2020. Canada surpassed it in August of this year and continued to show modest monthly growth prior to this 1% setback.
Compare that to the United States, where 12 consecutive months of growth show resilience against coronavirus variants. However, total employment has not yet reached pre-pandemic levels. Using the average net change of the past 12 months (0.36%), the United States is expected to hit those levels in the next few months. Canada, by comparison, has seen an average net gain of 0.27% over the same period.
As for unemployment rates, they rose in Canada (6.5%) and the United States (4.0%) for the first time in nine months and remain higher than the respective pre-pandemic baselines of 5.6% and 3.5%.
We expect the decrease in Canadian employment will be temporary, as provinces have already started to loosen restrictions imposed in January. These restrictions directly affected service jobs, restaurants, hotels, arenas and retail stores, and they were a main contributor to the net job change.
Additionally, as omicron swept over Canada, sick workers were eligible for employment insurance (EI), which led them to be counted as unemployed. And since new COVID-19 cases peaked at 58,891 per day on Jan. 11, they have decreased by almost three quarters, with 14,025 daily cases reported on Feb. 3.
So, despite the disappointing start to the year, we expect the following months to yield more positive results for the Canadian job market.