Canada job growth slows, impact of new lockdowns still to come

Canada added 62,100 jobs in November and the unemployment rate fell to 8.5%, beating analyst predictions of a gain of 20,000 jobs and for the jobless rate to remain at 8.9%. Employment remains about 3% below pre-pandemic levels.

“Canada’s labor market continued to outrun COVID in November,” said Royce Mendes, senior economist at CIBC Capital Markets. “That being said, I think you could see some of the effects of additional restrictions weighing on the services sector.” Jobs in the service sector, which has been hard hit by the pandemic, rose by a modest 17,900, while employment in the goods sector rose by 44,200.

Full-time employment was up by 99,400 jobs while part-time employment fell by 37,400 positions. Full-time employment remains 2.9% below pre-pandemic levels.

The Canadian dollar strengthened as much as 0.3% to notch a two-year high at 1.2822 per U.S. dollar, or 77.99 U.S. cents.

The latest survey took place from Nov. 8 to 14, before public health lockdowns were imposed in populous Toronto and one of its largest suburbs. The province of Manitoba also started lockdowns on Nov. 12.

“It’s likely that COVID will catch up with the Canadian economy in the December data,” said Mendes. “I think we should expect a decline in both employment and overall economic activity.” Some 448,000 Canadians remained underemployed in November compared with before the pandemic. Hundreds of thousands of Canadians continue to have jobs but not work any hours at all.

Total hours worked across all industries, meanwhile, rose by 1.2% compared with October.

The employment data was seen reinforcing expectations that the Bank of Canada will keep its key interest rate at 0.25%. Economists surveyed by Reuters also do not expect the bank to increase its bond-buying program.

“The jobs (report is) consistent with no change in the BoC’s 0.25% rate setting at next week’s announcement,” said Ryan Brecht, a senior economist at Action Economics.