- 1.01 million fewer Canadians were working in March, an unprecedented decrease, and enough to drop the employment rate (share of those 15+ who are employed) to 58.5%, the lowest reading since 1997. Put differently, roughly 1 in 20 Canadians who had been working in February weren’t in March. The unemployment rate was 7.8%, a 2.2 percentage point climb from Februrary that also set a new record for the pace of deterioration.
- The drop in net employment was driven largely by the private sector (-830k), with public sector employment down 145k and self-employment little changed by comparison (-36k). All provinces saw employment drop, with the largest declines in Ontario (-403k, or -5.3% from the prior months’ figure), Quebec (-264k; -6.0%), B.C. (-132k; -5.2%), and Alberta (-117k; -5.0%).
- The challenges in capturing the nuances of the COVID-19 make alternative measures useful. In March, 219k people were not in the labour force but had worked earlier in the month and still wanted a job, but had not looked for one given the ongoing pandemic – this meant that they were not counted as unemployed. Including these people would have sent the unemployment rate another 1.1 p.p. higher, to 8.9%.
- Given the nature of the shock, although job losses were widespread, they were unsurprisingly tilted towards ‘high touch’ sectors that were among the first to face social distancing restrictions. These include accommodation and food services (down a jaw-dropping 23.9% in just one month), information, culture, and recreation (-13.3%), educational services (-9.1%), and wholesale/retail trade (-7.2%).
- Notably, the unemployment mix was very different. Those reporting being unemployed due to a temporary layoff surged to 550k, or roughly 33% of all unemployed persons – another record high. ‘Job searchers’, usually more than 90% of unemployment, fell during March, another reflection of the pandemic.
- As significant as the headline drop in employment was, it likely doesn’t capture the complete impact on activity. While typically noisy, there is no mistaking March’s 15.1% drop in hours worked as anything other than a sign of just what a sudden stop of activity in many important sectors looks like in practice.
Key Implications
- Gulp. We all knew it was going to be bad, but it is still hard to process the numbers we received today, particularly once definitional quirks that kept the unemployment rate from looking worse than it might have otherwise been are accounted for. Indeed, this single report wiped out 40 months of net employment gains, and the worst is yet to come. Reports that more than four million Canadians have already applied for various income support measures (EI and the Canada Emergency Response Benefit) remind us that as bad as the March data was, we’re not yet looking at the full COVID-19 impact.
- The scale of the early impact underscores the importance of income supports and other measures to help firms and households make it through this challenging time (see our recent report on what has been announced so far and a peer comparison).
- It is thus encouraging that household income support applications and delivery have by most accounts been efficient so far. We hope it will be a similar story for wage subsidies, and early signs that some firms may be reversing layoff decisions as a result are promising. Maintaining the employer-employee relationship will likely help speed the economic recovery when we reach the other side of the pandemic.
