The Canadian economy lost more jobs that expected in January and the unemployment rate jumped, as restrictions were tightened to slow the spread of the Omicron coronavirus variant, official data showed on Friday.
Canada shed 200,100 jobs, the most since January 2021, and the jobless rate jumped to 6.5% from 6.0% in December, Statistics Canada said. Analysts surveyed by Reuters had expected a loss of 117,500 jobs and the unemployment rate to rise to 6.2%.
"It's a little bit weaker than we expected perhaps but it really lines up quite well with what we saw last spring," said Andrew Kelvin, chief Canada economist at TD Securities.
"I think it is something that we look through given that we can connect it quite directly to the lockdowns related to the Omicron variant."
The losses were broad-based, with the economy shedding 82,700 full-time jobs and 117,400 part-time positions.
The services sector lost 223,100 positions, mostly in accommodation and food services, easily outweighing a gain of 22,900 jobs in the goods producing sector.
While the job losses were heftier than expected, analysts said it was unlikely to change the calculus for the Bank of Canada, particularly as jobs have rebounded quickly in previous waves once businesses reopened.
"I don't think this will have a big impact on the Bank of Canada," said Doug Porter, chief economist at BMO Capital Markets. "I think their view will be that this is entirely related to the temporary restrictions and that it won't last."
Health officials said last week that Omicron infections had passed their peak in Canada and a number of provinces have eased restrictions.
Bank of Canada Governor Tiff Macklem reiterated this week that interest rates would soon rise and that Canadians should expect multiple increases. Money markets are betting on a first increase in March, with at least five this year.
The Canadian dollar was trading 0.8% lower at 1.2772 to the greenback, or 78.30 U.S. cents.
(Reporting by Ismail Shakil in Bengaluru and Julie Gordon in Ottawa, additional reporting by David Ljunggren in Ottawa and Fergal Smith in Toronto Editing by David Goodman, Chizu Nomiyama and Jane Merriman) ((email@example.com; Tweet @ismail___s;))