March 12, 2021 | 09:17
February Made Jobs Deliver
Canadian employment rebounded impressively in February, almost precisely reversing the big setbacks in the two prior month. Jobs rose 259,200 after the hefty 212,800 drop in January, carving the jobless rate 1.2 ppts to 8.2% (from 9.4%), its lowest level since last March. While we (and consensus) were anticipating a solid reversal, the bounce arrived even earlier and more forcefully than expected. The February survey was conducted just as portions of the country were partially re-opening, and we expect some further gains in the next report (that survey will be conducted next week). Just as the January swoon was driven by part-time, service sector positions in restaurants and retail, the big comeback last month was driven by the same. Still, full-time jobs also managed to rise by a solid 88,200 in the month, and the broader advance was almost entirely in private sector payrolls.
As a result of the decent quality of the overall employment gain, our grading system rates this report at a very strong at 87.5. It also was boosted by the deep dive in the jobless rate, and another strong rise in hours worked. The latter were up 1.4% in the month, and are now headed for an annualized gain of more than 7% in Q1—suggesting our GDP call of 3.5% for the quarter may be cautious. Finally, average hourly wages receded to a still strong 4.8% y/y, with the pullback reflecting the comeback in lower paying positions last month.
By sector: Last month's gains were led by the "re-opening sectors", in almost a mirror image of the two prior months. Retail & wholesale trade jumped 122k (versus -168k in January), while hotels & restaurants rose 65k (-75k). Both have further to go, with the latter still down a massive 26% y/y (versus overall jobs down 3.1% from last February's pre-pandemic peak). Education and other services both reported solid rebounds of just over 28k last month as well. Meantime, the goods-producing sectors had a quiet month, with moderate gains in construction and manufacturing.
By region: The biggest drivers were Quebec (up 113k) and Ontario (up 100k), after Central Canada had dragged heavily on jobs in the prior month. Still, 7 of the 10 provinces reported job increases, with the Western provinces showing solid and consistent gains. Alberta posted a strong advance (17k), and appears to be building some momentum amid the nice comeback in energy prices. Over the past year, that province has seen a 3.1% drop in jobs, now right in line with the national average. B.C. (up 27k) has fared even better amid a less negative experience with the virus, and is now down just 0.6%. Only Nova Scotia has suffered a lighter hit in jobs over the past traumatic year (down 0.4% y/y).
Bottom Line: The big February jobs bounce is a pleasant surprise, reinforcing the broader theme that the Canadian economy fared better than widely expected in a challenging winter. True, there is still plenty of wood to chop before the job market is close to normal, with employment down 599,000 from the pre-pandemic peak, and the unemployment rate 2.5 ppts higher than a year ago. But a few more months like February could change the conversation rapidly on the pace of the recovery.