Canadian Employment Preview: Forecast from six major banks for January jobs report

Canada publishes its labor figures at 13:30 GMT and a second consecutive month of declines is on the cards. As we get closer to the release time, here are the forecast of the economists and researchers of six major banks.

Ahead of the jobs report, USD/CAD is trading above 1.28, reflecting dollar strength rather than the recent increase in oil prices.

TDS

“Job losses should accelerate to 90K in January, reflecting more stringent lockdowns imposed across Eastern Canada. Look for a concentrated impact on services with a large drag from retail and other targeted industries, and a larger decline for part-time workers. Hours worked will give insight into growth conditions for January while unemployment should push north of 9%.”

NBF

“COVID-19 continued to wreak havoc on the country early in the year, hinting at another weak month for the labour market. We’re are calling for a -60.0K print, with losses again concentrated in the sectors most affected by social distancing measures. Combined with a decrease in the participation rate, this job pullback could translate into just a 0.1% increase in the unemployment rate to 8.7%. Looking further ahead, employment is expected to resume its upward trend in February, assuming some of the measures put in place to contain the spread of the virus are phased out.”

RBC Economics

“We expect Canadian headline employment to have fallen 40K. This would build on December’s 53K drop which was the first decline in top-line employment since last spring. January’s report is likely to show that job losses continue to be heavily concentrated among lower-paid workers. Expanded EI and CRB programs are providing substantial income replacement for these workers leaving household purchasing power intact even in the face of weakening labour market conditions.”

Capital Economics

“We expect Canada’s Labour Force Survey to show that employment dropped by a further 100K in January, following the tightening of the coronavirus restrictions at the end of December.”

CIBC

“We’ve seen this story before. As with the first wave, the second wave of COVID-19 has left public officials with little choice but to shut down parts of the economy. As with earlier measures, industries such as accommodation and food services, arts, entertainment and recreation, and transportation will likely see the greatest job losses from the second round of restrictions. While measures of the stringency of rules suggest that this year’s versions are similar to those of the first wave, the good news is that the effect on overall employment likely won’t be as severe as it was in early 2020. Many industries have adapted since then, as have individuals who have shifted purchasing patterns. That will work to ease some of the pain from the latest of shutdowns.”

Citibank

“We expect Canadian employment to fall again in January, although with a more modest decline compared to an upwardly-revised 52.7K decline in December. The unemployment rate should rise to 8.9% from an upwardly revised 8.8% in December.”