Canada

Canadian Jobless Claims Smash Previous Records, Unemployment Rate Likely In Double Digits

Canada’s economy was sputtering before COVID-19, but last week’s job losses are unprecedented. The Federal government now estimates 960,000 jobless claims were made just last week. The number of claims for the week is higher than any monthly tally in Canadian history. The weekly bump is around 5% of the workforce making the unemployment rate the highest in decades.

Canadians Made Over 960,000 Jobless Claims Last Week

The number of jobless claims is unprecedented for Canada – and we don’t even have the full numbers yet. The federal government has estimated that 960,000 jobless claims were filed last week. Weekly numbers are not typically available, but we know it’s the biggest week, because it dwarfs any other month. Not any other month in the past few years either. This is bigger than any month going back to the 1940s, when data was last available. The next closest month would be December 1957, when 499,213 jobless claims were made – just half of last week’s number.

Canadian Weekly Jobless Claims

The average weekly jobless claims per month, compared to last week’s government estimate.

Source: Statistics Canada, Better Dwelling.

Unemployment Most Likely In Double Digits

The size of these layoffs is most likely to push unemployment levels to a multi-year high. The last reported unemployment rate was 5.58% in February. Before accounting for new jobs gained and the rest of the month’s job losses, the rate would come in around 10.3%. This is the first time Canada would be dealing with an unemployment rate this high since March 1997. We have a whole generation of people that have never experienced unemployment this high.

Canadian Rate of Unemployment

The unadjusted monthly rate of Canadian unemployment ending February, and March forecast using only last week’s jobless claims.

Source: Statistics Canada, Better Dwelling.

The impact of the COVID-19 outbreak compounds issues at the end of Canada’s business cycle. Jobless claims were already rising – with 385,700 in December, 9% higher than a year before. Incomes in both Toronto and Vancouver fell in 2019, for the first time in years. Insolvencies were rising by double digits in BC, and Ontario at the end of the last quarter. GDP per capita has also been trending negative for the past couple of quarters as well.

Canada was already facing an uphill battle, before record shattering job losses arrived. This combined with already high household debt is going to make it a longer, and tougher path to a recovery.

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19 Comments

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  • Thomas B 5 months ago

    The jobs will come back in just a few weeks. Big difference between now and previous job losses.

    • Jason Chau 5 months ago

      Not even close to how this works. The V-shaped recovery is a stock market thing.

      There’s no such thing as a human capital recovery that looks like a V. Executives won’t openly say this, but this is also a time to purge liabilities without looking like a bad guy in the public. i.e. offer a buyout package to older people, and then rehire with fewer young people they’ll work harder.

    • JJ 5 months ago

      This may work for some businesses, but many will never open doors again. Combine that with reduced household spending and there will be a ripple of reduced spending through the economy.

      A business that depends on other businesses and households spending money won’t just suddenly rehire everyone they have laid off without any guarantee of incomes/profits returning to previous levels. I suspect it will take a while to get the machine chugging along again.

    • Carlton 5 months ago

      Lol!

      Good one…….

      I hate to ask but……. how do you know?

  • DB 5 months ago

    Nobody would have seen this coming 6 months ago..This is going to hurt a lot of families for a long time and I hope the government know’s what they are doing to mitigate the financial circumstances that are going to come with such a drastic and unprecedented response.
    for some reason I believe the worst is yet to come.. I hope the response is not worse the disease itself.. overvalued homes/income ratio, 5000000., 65 cent gas, putting the west out of business for a long time to come, and a recent shut down of the rail industry due to a pipe line that with 65 cent gas would not make economic sense to put in. This is going to hurt for a while…and will probably end up having to live with COVID 19 with it’s 3 to 5 percent mortality rate.

    • M.Bury 5 months ago

      DB said “Nobody would have seen this coming 6 months ago.”

      I beg your pardon, but I saw this coming 3 years ago (as did a few others) and warned as many people as I could. They openly laughed in my face. Now they are clamoring to get my advice.

      “hope the government know’s what they are doing to mitigate the financial circumstances”

      Why should the government (meaning the taxpayer) reward those who made bad choices despite warnings and, in effect, punish those who have been prudent?

      ” putting the west out of business”

      Why should the taxpayer save another dying industry. Why not put the funds into industries that are growing and creating more jobs rather than industries that are shrinking and cutting jobs?

      • Tom Wolfe 5 months ago

        I think DB meant no one with a deeply vested interest wanted to acknowledge what was coming. I have been saying this for years too. People with $70K annual incomes cant afford $1M houses, unless the currency is Monopoly money.

        You can buy Monopoly including the money and all the houses for $20 real dollars if you still have it. Tragically this might be more than a metaphor.

  • straw walker 5 months ago

    I wonder how this will affect the record housing sales in Vancouver??
    The question I wonder is how will sales of the $80,000 diesel duelly One ton jacked up with mudder tyres keep selling..??
    Ford has been making moves to quit making cars especially smaller cars..will this plan have to be rethought..??

    • Tom Wolfe 5 months ago

      Fords making ventilators. Stock popped 15.5% so far today.

      • Trevor 5 months ago

        Every stock popped today, it’s called a bear market rally. My grandmother worked over thirty years at the Oakville ford plant, I don’t expect the company to survive without restructuring.

        • Tom Wolfe 5 months ago

          No they didn’t. Amazon, alphabet, Facebook, Microsoft, and many more were all significantly down today. Ford, however, closed 9% up. Pretty good day if you held your house value in ford stock.

  • JC 5 months ago

    Government is bailing out homeowners with a 2k per month, for up to 4 months. Then people can start collecting EI thereafter. Seems majority of people were right all along. Housing IS too big to fail. And this is just the beginning. There are no consequences for those being wreakless with finances.

    • neo 5 months ago

      Dude. You think someone on government cheques is going to get a mortgage from a bank for these million dollar cookie cutters? Not to mention renewals. Rates are going up regardless of what central banks do. There is far more credit risk and far less credit worthiness. At least 25% of this job loss is longer term and structural.

      • Trevor 5 months ago

        You said it. We’re in for assets deflating and likely goods inflating. 1970s style stagflation, or a real depression.

  • Bob 5 months ago

    Would be much much cheaper to just freeze the economy, like in Denmark.

    Just freeze/suspend rent, mortgage, property tax and interest payments for the duration of the lockdown. Not a deferral, but just make the payments go away, as if the time never happened.

    Here’s an example:

    Each month, A owes $300 to B who owes $300 to C who owes $300 to A

    The government tells A and C that they must stop working and earning money.

    This is a problem.

    Solution 1: The government makes everyone whole by printing $600 and giving $300 to A and C each month

    Solution 2: Suspend all payments while the government prevents them from working. Pretend the time period never happened.

    Printing an open-ended amount of money indefinitely is madness. Solution 2 is simple, more effective at bailing out those hurt by the lockdown, and much cheaper in the long run.

    How are the jobs going to come back if all of the retailers and small businesses have to declare bankruptcy because they can’t make rent?

    • Trevor 5 months ago

      Buddy lots of the liabilities are in foriegn currency to private businesses, what you’re proposing is called default in credit law. The world banking system isn’t going to play by Canadian rules, Denmark might get away with it because only the riksbank and Danish banks lend there? Canada has lots of foreign lenders

      • M.Bury 5 months ago

        Trevor,

        What Bob describes is pretty much what they did at the depths of the 2008 crisis when they realised the extent of counterparty risk in derivatives. Unfortunately, when nearly every party is insolvent there a few other courses of action.

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