As the Omicron-driven COVID-19 wave peaked, the Canadian economy shed more employment than projected in January, marking the first drop since May 2021, according to data released on Friday, although economists forecast a swift rebound in the coming months.
According to Statistics Canada, Canada lost 200,100 jobs in January and April 2021, approximately equal the losses in January and April of that year, and the unemployment rate increased to 6.5 percent from a corrected 6.0 percent in December.
Media predicted a loss of 117,500 jobs and an increase in the unemployment rate to 6.2 percent.
“It’s a touch weaker than we expected,” said Andrew Kelvin, chief Canada economist at TD Securities. “But it really lines up very nicely with what we saw last spring.”
“Given that we can connect it very closely to the lockdowns related to the Omicron variety, I think it’s something we should look into.”
As the Omicron variety spread, Canada’s two largest provinces, Ontario and Quebec, tightened restrictions. This week, Ontario reopened gyms and indoor eating, while Quebec authorised limited athletic activities and reopened eateries.
In the previous two COVID-19 waves, similar patterns resulted in roughly identical job losses, followed by a full recovery in one to three months. Last Monday, health officials in Canada announced that Omicron infections had peaked.
Furthermore, Statscan stated that the increase in the unemployment rate last month was solely attributable to temporary layoffs and persons who were planned to start work shortly, implying that a bounce is on the way.
Even yet, the losses were significant, especially in high-contact services. Accommodation and food services lost 112,900 jobs, while information, culture, and leisure lost 48,400 net jobs.
“I don’t think this will have a significant influence on the Bank of Canada,” BMO Capital Markets’ senior economist Doug Porter said. “I believe their position will be that this is solely due to the temporary restrictions and that it will be lifted soon.”
Tiff Macklem, Governor of the Bank of Canada, said this week that interest rates will rise shortly, and that Canadians should expect numerous rises. The money markets expect the first hike in March, with a total of six increases this year.
The Canadian dollar was trading at 1.2772 to the US dollar, or 78.30 cents, down 0.8 percent.
