THE LABOUR MARKET the rennie brief
WHAT YOU NEED TO KNOW ABOUT THE LATEST JOB NUMBERS • Canada’s self-imposed economic shutdown in response to the spread of COVID-19 has resulted in a significant shock to the country’s economy and labour market. • As a result of shedding more than one million jobs between February and March, Canada’s unemployment rate rose to 7.8%—its highest in a decade. • Metro Vancouver saw its unemployment rate rise to 7.5% as 117,300 jobs were lost, accounting for almost 90% of BC’s total employment decline of 132,400. • All sectors of the economy, including real estate, are being impacted by these changes, which are significant but temporary.
9 APRIL 2020
Canada lost 1.01 million jobs between February and March 2020 due to the coordinated economic shutdown in response to COVID-19. BC and Metro Vancouver also suffered historic job losses last month, with unemployment rates reaching levels not seen in a decade.
BACKGROUND Each month, Statistics Canada collects data on the labour force, employment, and unemployment for the country as a whole, for provinces and its major metropolitan areas. The data of interest are the seasonally-adjusted numbers fromMarch 2020 as they are based on a March 15-21 collection period. Normally we would include this as a technical footnote; however, given the rapidly-evolving response and outcomes related to the spread of COVID-19, this is an important point to highlight because the economic consequences for Canada only truly began after the global pandemic was declared on March 11th. Given this, we expect the April jobs report to more fully reflect conditions as they have evolved to this point in time. CANADA LOST 1.01 MILLION JOBS IN THE PAST MONTH Canada shed more than one million jobs in March, a loss that was 8 times the next-largest monthly job loss in recent history, seen during the Great Financial Crisis in 2009. As a result, our national unemployment rate rose from 5.6% in February to 7.8%. This was the largest percentage-point increase for a single month in history (the previous high was a 1.0 percentage-point increase in September of 1981). This has brought the national jobless rate up to a level not seen since October of 2010. EFFECTS FELT PROPORTIONALLY ACROSS THE COUNTRY The magnitude of job losses across provinces was generally proportional to the share of jobs each province accounts for. BC’s 132,400 job losses in the past month represented 13.1% of all losses nationally, in line with BC’s share of national jobs of 13.2%. Similarly, Alberta accounted for 11.6% of job losses versus 12.1% of Canada’s employment base, while Ontario accounted for 39.9% and 39.4%, respectively. Of additional note here in BC is that the historically-high job loss last month was “only” 4.8 times greater than the second- largest decline on record (during April 2015’s brief downturn), compared to Canada’s job-loss multiple of 8.1. While current job losses across the country were relatively proportionate, BC may be fairing slightly better, at least within a historical context.
METRO VANCOUVER’S JOBLESS RATE JUMPS As 2020 began, Metro Vancouver had arguably the tightest labour market in the country, with an unemployment rate in the range of 4.0 to 4.6%. The consequences of social distancing had a significant impact in March, pushing the region’s unemployment rate to 7.5% (vs to 7.2% for BC). While still below the Canadian average of 7.8%, the month- over-month 2.9-percentage-point increase was the largest in Metro Vancouver since before 2001 (when the current data series begins). The second-biggest monthly jump on record was a 1.8 percentage point increase in February 2011. The 44% increase in the region’s unemployment rate was driven by 117,300 jobs losses over the past month. These losses represented an 8.0% month-over-month decline in jobs, more than Toronto’s 6.4% drop, Montreal’s 7.1%, and BC’s 5.2%. Perhaps most notable is that while Metro Vancouver accounts for 58% of BC’s jobs, it accounted for 89% of BC-wide job losses in March. While this likely reflects the out-sized role that tourism and consumer services play in the region compared to the rest of the province, further research is needed to better understand this dynamic on a sectoral basis. WHAT IT MEANS The ultimate impact on home prices in the near-term is unclear as the supply-side shock (loss of jobs) has negative demand- side consequences for virtually every sector of the economy, including real estate, with listings being fewer in number and sales becoming rarer. As social distancing measures are eventually relaxed and ultimately removed in the coming months, real estate activity is likely to move back towards pre- pandemic levels as process and procedures return to normal and economic fundamentals move back on-trend. We will be watching how the federal stimulus plan, including the CERB and the wage subsidy, works to support employment as we collectively navigate through this uncertain economic environment.
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