On Thursday, we are expecting the Canadian employment report. This data could highlight the intensity of the damage the stringent measures to fight COVID-19 have taken on the economy.
There won’t be any surprise now, if the numbers come out steeper than expected, as we have seen in other leading nations.
Jobless claims are accelerating in Canada as the pandemic forces more and more businesses to shut, This has, in turn, forced the government to expand a program to help keep workers on payrolls.
Expectations are for a surge in unemployment to 7% from 5.6%. The projection for the employment change is -350,000, from 30,300 previously.
March Key Events
The BOC on the 4th of March cut interest rates by 50 basis points to 1.25%. They cut again on March 13th by another 50 basis points, getting the rates to 0.75%.
Finally, one last 50 basis point cut came on the 27th March, bringing the rates to all-time lows of 0.25%. This series of cuts marked the first time the bank had reduced rates in four years.
The BOC took such aggressive action seemingly following the Fed’s lead, something they don’t usually do. This was deemed necessary by the BOC to ease economic pressure on the economy due to the pandemic.
They also announced stimulus packages and buying government debt by CAD $5 Billion every week.
11% of Canada’s workforce has applied for jobless claims post lockdown. This equates to around 2.15 million workers. This also sheds light on what to expect moving forward, indicating that the worst is yet to come.
The Canadian government announced last week that it will provide subsidies to businesses to keep the workers on the payroll. This did help the frenzy as, post-announcement, we saw an average of 120,000 workers applying for the jobless claims compared to 160,000 post-lockdown.
How much effect the package will have is yet to be seen. At present, it looks like it might be too little too late.
There is quite a contrast between different economists regarding exactly how much of a job loss is to be expected.
The Royal Bank of Canada expects about 1 million jobs lost, while 4Cast expects about 100,000. JP Morgan, on the other hand, expects around 175,000.
The spread of the pandemic and its implications arising from the lockdown situation is wreaking havoc on the economy. While it is hard to point out exactly where the actual numbers will land, it certainly looks like it would be at the higher end of the curve.
Like the US NFP caught everyone by surprise, are we to expect a rerun here with the Canadian employment reports? Well, unfortunately, unlike the US NFP, Canada’s job report will include the post-lockdown outcome.
So, the chances are that Canada’s number could show even more disarray.