The surge in coronavirus infections in Canada this winter has taken a heavy toll on the economy, which has only added to the urgency for a vaccine to be widely distributed.
Another 213,000 jobs were lost in January, an acceleration over December’s decline, according to data recently released by Statistics Canada. That drop brought the two-month total to 265,000 lost jobs. The decline in January was far higher than economists had predicted — the consensus was for a decline of roughly 40,000 jobs — and is a sign of the increasing economic and human toll of the pandemic’s second wave.
The job losses follow lockdown measures that were instituted in December and January, including school closings, stay-at-home orders, curfews and additional restrictions on business activity. The fallout from these restrictions is showing up in alternative data sources like traffic levels and public transportation usage, both of which have declined over the past couple of months.
It all adds up to a rising unemployment rate, which hit 9.4% in January, up from 8.8% in December. The increases were not surprisingly particularly acute in provinces that imposed tighter restrictions.
Quebec, which instituted a curfew, had its unemployment rate increase from 6.8% to 8.8%, and Ontario and British Columbia had big increases as well, rising by nearly a full percentage point.
The unemployment rate in Alberta, however, decreased to 10.7% in January from 11.1%. Alberta’s decline was a welcome sign in a part of the country that was facing economic challenges before the pandemic. Increasing oil prices and higher rig counts likely supported the improvement in Alberta’s unemployment rate.
On aggregate, most of the job losses, or about 240,000, were in the services-producing sector. Trade, and accommodation and food services, accounted for 168,000 and 75,000 job losses, respectively. Those losses were offset by some gains in other areas of the economy.
To address the economic dislocation, the Canadian government recently announced a new funding program for sectors hit hard by the pandemic. Called the Highly Affected Sectors Credit Availability Program, it is an acknowledgment that the pandemic has affected some industries more than others, especially hospitality, tourism and retail.
But beyond any fiscal relief, these industries are most of all waiting on the distribution of the vaccine in Canada. Shipments of the vaccine have slowed markedly, as has the rate of vaccination. Canada now has one of the lowest rates of vaccination among major countries. The distribution has been hampered by supply disruptions, including export controls over the past month.
The timing of the additional vaccines’ availability is highly uncertain. The government previously indicated that the vast majority of Canadians would be vaccinated by September. At this rate, this timeline seems unlikely.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.