Canadian job losses to top a million: Citi economist
Canada’s job losses in March will likely be unprecedented as the COVID-19 pandemic continues to ravage the country’s labour market, according to Citigroup Inc.
Citi economist Veronica Clark is forecasting a decline of 1.1 million jobs for the month, and sees the unemployment rate rising to 9.7 per cent from its current 5.6 per cent level, when Statistics Canada releases its monthly Labour Force Survey on Thursday.
“I think it’s worth reiterating that forecasts in this period are really unlike anything we’ve ever seen before,” Clark told BNN Bloomberg’s Amanda Lang Wednesday. “We’ve really had to throw out our normal forecasting models and rely more on anecdotal evidence.”
Clark said that the nearly-one-million jobless claims filed in the third week of March helped inform the 1.1-million job loss figure, adding she expects the restaurant, hospitality, airline, and retail sectors to be the hardest-hit.
“It really is definitely unprecedented,” Clark said. “What’s more abnormal about [the losses compared to other crises] is they’re coming all at once.”
Citi’s forecast is much higher than the median economist estimate of 500,000 jobs lost, according to data compiled by Bloomberg. It’s also the most bearish forecast, ahead of Royal Bank of Canada, which sees a decline of one million jobs. David Sloan of Continuum Economics has the most conservative estimate of 100,000 jobs lost for the month.
The grim outlook comes amid a warning from Prime Minister Justin Trudeau, who told reporters “it’s going to be a hard day for the country” when the jobs report is published Thursday.
Trudeau also announced the federal government would be relaxing standards for the emergency wage subsidy program, allowing businesses that report a 15-per-cent drop in revenue to qualify instead of limiting it to firms that show a decline in revenue of at least 30 per cent.
In a note to clients Wednesday, Clark said fiscal measures, like the subsidy, increase the uncertainty around future employment readings.
“April jobs data could show large numbers of employees being rehired as business seek to take advantage of the new wage subsidy,” Clark wrote. “Of course, there will still be many businesses that will be forced to lay off employees, and our base case would be for another decline in employment figures in April.”
Clark told BNN Bloomberg while there will likely be a sharp increase in rehiring once the economy restarts, the labour market will could remain soft for the remainder of the year as it’s doubtful that all the jobs lost during the pandemic will be restored.