Central 1: Employment Steady As Canadian Employment Declines Sharply

February 18, 2021

  • January employment numbers highlight K-shaped economic recovery
  • BC sees small employment gain in January; unemployment rate up from 7.2 per cent to 8.0 per cent
  • Full-year goods exports contracted eight per cent in 2020 – main drag was 24 per cent drop in energy exports, largely reflecting lower prices for coal and natural gas
  • Lower Mainland housing market stays red hot in January


BRITISH COLUMBIA – Canadian employment took a beating to kick off 2021 as employment plunged 1.2 per cent (or 212,800 persons) to the lowest level since August 2020. Additional economic restrictions to contain the pandemic’s second wave in Ontario and Quebec cut sharply into retail, hospitality and other service sector employment. Ontario extended restrictions that previously applied only to southern region (including closure of nonessential retail businesses) throughout the province at the end of December, while Quebec closed nonessential businesses and imposed a curfew

The decline was almost entirely in retail/wholesale trade (-167,600 persons) and accommodations/foodservices (-75,000 persons) with net declines entirely attributed to part-time work. Given the sectoral patterns, it is unsurprising that young people (aged 15-24) bore the brunt of the job loss (down 107.500 persons or 4.6 per cent). Estimated unemployment rose from 8.8 per cent to 9.4 per cent of the labour force, again the highest since August.

Among provinces, both Ontario and Quebec drove the contraction with losses of more than two per cent from December. In contrast, employment rose in almost every other province except Newfoundland & Labrador.

BC managed a small but insignificant employment gain in January that maintained positive momentum but points to stall in hiring. Total employment rose by 0.1 per cent or 2,800 persons marking a ninth straight positive reading. Year-over-year, employment was down 1.7 per cent which was the best performance among large provinces reflecting relatively tame restrictive measures compared to larger peer provinces during the second wave. On the bright side, growth in full-time work in BC outpaced contraction in part-time employment.

Metro Vancouver employment growth far outpaced the rest of the province with growth of 0.6 per cent (or 9,000 workers) from December, but pandemic era losses still remain steeper in the region.

For the most part, industry employment held steady during the latest month although accommodations and foodservices fell 4.2 per cent or 7,600 persons which likely reflected a weaker than expected holiday season and post-season slump. Education (down 4.2 per cent or 7,700 persons) also weakened, alongside a slide in agriculture work (down 18.8 per cent). In contrast, corporate offices and technology fi rms and government continued to hire. Professional/scientific/ technical services employment rose 4.2 per cent (10,100 persons), information/culture/recreation rose 8.8 per cent (up 10 per cent), and public administration gained 3.8 per cent (4,900 persons).

January numbers continued to highlight the K-shaped recovery of the economy. Hospitality sectors, face-to-face private personal services, and broader tourism continue to struggle with year-over-year declines of more than 10 per cent, while the knowledge economy and public administration have fully recovered.

Despite flat employment, BC’s unemployment rate shot higher from 7.2 per cent to 8.0 per cent. Metro Vancouver’s unemployment rate rose from 6.9 per cent to 8.9 per cent due to a surge in labour force participation. Rising participation rates drove the increase. More individuals searching for work is one contributor but does not explain magnitude of gain. A rollback in the unemployment rate is likely in coming months conditional on employment levels.

First quarter employment growth is expected to remain subdued before turning higher reflecting the relentless struggles with the COVID-19 second wave, associated uncertainties for businesses related to possible restrictions, and the fact that the low-hanging fruit of the recovery has been picked. Vaccine deployment and reduction in COVID-19 cases is critical in allowing the hardest hit hospitality sectors to increase capacity and consumer confidence to rise. A rebound in tourism requires wider deployment of vaccines both in Canada and abroad to allow re-opening of borders, but this is unlikely until well into the second half of 2021.

Exports hold steady in December to cap off challenging 2020

BC’s international export recovery extended through December while annual dollar-volume shipments disappointed with the lowest sales since 2016. Monthly exports reached $3.73 billion in December, slipping 0.6 per cent on 12-month basis and compared to a 5.3 per cent gain in November. Nevertheless, the trend remained positive heading into 2021 albeit at a slowing pace.

December export numbers were mixed. Energy (which includes metallurgical coal) slumped 25 per cent on a year-over-year basis during the month, albeit remaining steady on a month-to-month basis. Raw resources fell from November, narrowing year-over-year growth from a 90 per cent gain in November to 20 per cent in December. The primary support was stronger forestry export which rose 32 per cent year-over-year and rebounded 12 per cent on a monthly basis after a brief pullback.

Full-year goods exports contracted eight per cent in 2020, owing both to pandemic effects and a downward trend that persisted through 2019. The main drag was a 24 per cent drop in energy exports, largely reflecting lower prices for coal and natural gas. Off sets were raw metals and minerals (up 12.4 per cent).

Forestry sales which makes up about a third of exports declined 3.6 per cent during the year due in large part to the base year effect of a weakening trend through 2019 which recovered amidst stronger market demand and conditions for lumber partway through 2020. That said, export sales are masking substantial pricing effects as the small drop in forestry exports was driven largely by surging prices as real shipments remained low due to loss of capacity following mill closures in 2019.

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