Canadians prepare for “worst job report” in modern history

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Trudeau was referring to the long-awaited release of March employment data from Statistics Canada’s generally unspectacular Labor Force Survey.

Far from making fun of it this time, the report will provide the first and most important indicator of Covid-19’s bite on the economy.

Canada, like so many countries around the world, has effectively shut down huge swathes of its economy as authorities scramble to limit the spread of the coronavirus.

The United States, for example, had a taste of the labor market impact of Covid-19 in last Friday’s employment report.

Americans will learn more about the extent of the damage on Thursday as the government releases weekly jobless claims figures.

In Canada, the public watched that job losses have piled up – experts say is an unprecedented rate.

“This will be the worst jobs report Canada has seen in modern economic history,” Frances Donald, chief economist and chief macro officer for Manulife Investment Management, told POLITICO on Wednesday. “It will be four to five times worse than any other report we have seen.”

A consensus of forecasters predicts that job losses in March will reach around 500,000 and the unemployment rate will reach 7.5%, said Donald. The unemployment rate was 5.6% in February, close to its lowest in 40 years.

By comparison, the Labor Force Survey found that the labor market added 37,600 full-time jobs month-to-month in February – before the economic impact of Covid-19 in Canada.

Regarding March, Donald said that the level of deterioration that Canada will see in one month is what one would expect over a nine to 12 month period during a recession.

“They will be front loading in a way,” she said of the jobs lost, many of which she says will be recovered after the health crisis passes.

“While these numbers will seem devastating on the surface, we must be aware that this is a man-made recession, driven by our desire to protect lives and health infrastructure. We pressed a pause button which will finally be deactivated. “

Early indicators suggest that the jobs crisis will be severe. For example, the number of claims has skyrocketed for the Canada Employment Insurance program and the federal government’s new emergency worker benefit, which went into effect on Monday.

A government official told POLITICO that between March 15 and the end of Tuesday, the number of applications for these combined programs increased to 4.26 million, more than 11% of the total population of Canada and about 21% of its workforce.

Canada’s employment report will follow US figures for March released on Friday that showed the US economy had lost 701,000 jobs – its first decline since September 2010 – and that its unemployment rate had increased by 4.4%.

Data collection for the U.S. report, however, ended on March 12, before the major businesses closed and the stay-at-home orders.

Canada’s report, on the other hand, should give a clearer picture of what happened when the economic crisis really started to take hold.

Thursday’s report will be based on data from the reference week March 15 to March 21 – just when governments in Canada started to shut things down and implore the public to restrict movement.

The Labor Force Survey captures a picture of the labor market by asking a sample of around 56,000 households to answer questions over a reference period of one week each month.

“Fortunately, the survey is a good way to capture the start of the economic crisis,” Miles Corak, professor of economics at the Graduate Center at City University of New York, recently wrote on Thursday’s employment numbers.

Corak, who advised the Trudeau government a few years ago on social and employment policy, wrote in a subsequent article that he expected Canada’s unemployment rate to almost double between February and March – and could even climb.

“Even with that, to put it mildly, because the official investigation preceded some of the most dramatic stops that occurred later in the month,” he wrote. “I suggest we are probably even close to 15% right now.”

Other experts also expect the numbers to get uglier.

“The EPA of tomorrow will provide a partial revelation of the turmoil that the crisis has created in the Canadian labor market. The worst is yet to be revealed, “said a note to Finance Minister Bill Morneau published on Wednesday by the Howe Institute’s C.D. Think tank.

The note was co-authored by Professors of Economics Tammy Schirle from Wilfrid Laurier University and Kevin Milligan from the University of British Columbia.

They write that Thursday’s job report will be an “incomplete snapshot” because the reference week came after the pandemic broke out. Their focus in the numbers will be on finer details like “actual hours worked” to get a better idea of ​​the impacts of Covid-19.

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