Jobs: Sharp Downward Revisions In The US, An Outright Plunge In Canada

Dan North | February 5, 2021

The economy created +49k jobs in January 2021, right around expectations. However, the report was not nearly as strong as it looked as there were two nasty revisions. The job loss in December, which had been previously reported as -140k, was revised down to an ugly -227k, and the November gain was revised down another -72k. So, there was a total downward revision over the two months of -159k, clearly outweighing January’s +49k gain. After the February 5th report, the economy has recovered 55.8% of the jobs lost in March and April of 2020. But back in November, the economy had recovered 56.6%; we’ve actually lost ground. We still have 9.9 million fewer jobs in the economy than before vile COVID reared its ugly head.

There were small but unexpected losses in construction and manufacturing of -3k and -10k, respectively. Transportation and warehousing jobs fell -28k after December’s -24k, perhaps due to post-holiday layoffs. But once again, it was shutdowns and restrictions that drove larger losses of -38k in retailing and -61k in leisure and hospitality, after a devastating loss of -536k in December. Significant gains came in government at +43k, and of course in professional and business services at +97k – this category almost always has one of the biggest gains since it’s one of the biggest categories.

The unemployment rate dropped from 6.7% to 6.4%, the lowest since before COVID, but part of the decline was because the labor force shrunk. At this point, the labor force participation rate is probably more important and that shrank 0.1% to 61.4%, a 44 year low. In a similar measure, the employment/population ratio ticked up 0.1% but outside of the pandemic, it’s still at a 38 year low.

Canada

The employment situation in Canada took quite a grim turn for the worse.  The economy lost a huge -213k jobs in January. Outside of the pandemic, that was by far the largest loss in 44 years of records, handily beating the next worse of -133k. It was also the second straight decline as -53k jobs were lost in December. At this point, the economy has recovered 71.3% of the jobs lost last March and April, which is fine, but two months ago in December, that figure was 80.2% - Canada is going the wrong way, rapidly. Shutdowns and restrictions in Quebec and Ontario were the entire story as those provinces lost -97.9k and -153.5k respectively. Wholesale and retail trade fell a precipitous -167.6k, wiping out six months of gains. Jobs fell for the fourth consecutive month in the information, culture and recreation industry as well as in accommodation and food services. Unemployment climbed a steep +0.6% to 9.4%, the highest since August. Both the participation rate and the employment rate fell sharply, and outside of the pandemic, are currently at their lowest levels in 24 years.

But Wait

Things are going to get better. COVID cases are falling very rapidly, and over the next few months, restrictions and shutdowns are surely going to be lifted. Then as the warmer weather kicks in, consumers who will be flush with savings from all of those stimulus programs, are going to go on an exhilarating spending expedition, driving 2021 GDP to 4.1% in the US, and closer to 5% in Canada. Here are the most recent COVID charts.

Daily new cases in the US down 48% since January 8th, and at the lowest level since November 11th.
Daily new cases in Canada down 58% since January 9th, and at the lowest level since November 9th.
Total doses administered per 100. 10.5% for the US, 2.7% for Canada, 1.5% for the world.
Administration rate: The US accelerated to 1.3 million doses per day, but unfortunately seems to be slowing. We need to get closer to 2 million per day to reach immunity this year.
The daily vaccination rate in Canada; faltering badly from 58k/day on January 27th to just 15k on February 4th. At this rate, it will take 10 years to get to immunity. Canada did order more vaccine per capita than any other country in the world, but they aren’t being delivered.  And the administration of the doses once they have arrived, has been very poorly handled. It’s got to improve and I am hopeful it will, soon.
Clearly, there was pretty bad news on the employment front in both countries on February 5th, but at least we know why. We know it was because of increased business restrictions, which can, and will be reversed. We will be getting more stimulus soon. Spending will accelerate and the economies will recover. But the vaccine rollouts still need to improve.
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