OTTAWA (Reuters) – Canada lost a record-breaking 1.01 million jobs in March while the unemployment rate soared to 7.8%, official data showed on Thursday, as the new coronavirus outbreak shuttered non-essential businesses and analysts warned the worst was yet to come.
Statistics Canada said the data did not fully capture the extent of the job losses since the agency polled respondents before the crisis began to take its full toll. Analysts in a Reuters poll had forecast a loss of 350,000 jobs and an unemployment rate of 7.2%, up from the 5.6% seen in February.
“Sticker shock for sure. This was about as bad as it could be given the weekly (unemployment) claims that have been divulged,” said Derek Holt, vice president of capital markets economics at Scotiabank.
Officials across Canada have ordered non-essential businesses closed and Canadians are being asked to stay at home as much as possible to protect public health. Statscan said on Thursday almost all the job losses were due to temporary layoffs, with workers expected to return to work within six months.
More than 5 million Canadians had applied for all forms of federal emergency unemployment help since March 15, government data showed, suggesting the real jobless rate is closer to 25%.
“The April employment reading is likely to be even worse, since shutdowns only really began in earnest around the middle of March,” said Royce Mendes, senior economist at CIBC.
The Canadian dollar <CAD=> initially fell to 1.4070 to the U.S. dollar, or 71.07 U.S. cents, after the jobs plunge, but recovered some ground to touch 1.4020 to the greenback, or 71.33 U.S. cents.
The job loss was the largest drop in a single month going all the way back to January 1976, when Statscan adopted the current model for gauging the health of the labor force. The previous record was the 125,000 jobs lost in January 2009.
The highest unemployment rate in the same data period was the 13.1% seen in December 1982.
Statscan said most of the March job losses were in the private sector, with the largest declines seen in the accommodation and food services sector.
Employment in the goods-producing sector fell by a net 47,200 jobs, mostly in manufacturing, while the services sector lost a net 963,500 positions.
The Bank of Canada slashed its overnight interest rate three times in March to 0.25% and launched what analysts called its first quantitative easing program as it tries to shield the economy from the impact of the coronavirus outbreak and low oil prices. The central bank’s next interest rate decision is set for April 15.
“Interest rates will be at these levels for more than a year. The Bank of Canada will continue with the quantitative easing program until the recovery is well under way,” said Andrew Kelvin, chief Canada strategist at TD Securities.
(Reporting by Kelsey Johnson in Ottawa; Additional reporting by David Ljunggren in Ottawa, Fergal Smith, Nichola Saminather and Moira Warburton in Toronto; Editing by Steve Orlofsky and Marguerita Choy)