Canadian Jobs Preview: Forecasts from five major banks, Omicron to tame employment growth

Statistics Canada will publish the Canadian January labour market data at 13:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers at five major banks regarding the upcoming employment data. The Unemployment Rate in Canada is forecast to rise to 6.2% in January from 5.9% in December with the Net Change in Employment declining by more than 100K in that period.

RBC Economics 

“Canadian labour market data for January is expected to weaken substantially. We’re eyeing a 75K drop in employment and an uptick in the unemployment rate to 6.4% after COVID-19 restrictions prompted business closures in large parts of the country.”

NBF

“We are calling for a -175K print that could lead to a 3-tick increase of the unemployment rate to 6.3%, assuming the participation rate fell back to 64.9%. With the health situation already improving, we expect January’s losses to be quickly erased.”

CIBC

“We expect a 130K decline in employment and a temporary rise in the unemployment rate to 6.3%. As long as the majority of these job losses are described as on temporary layoff and concentrated in service industries, there should be little implication for Bank of Canada liftoff come the time of the March meeting.”

TDS

“We expect a significant headwind and forecast a 150K pullback in total employment, consistent with the sharp drop in mobility indicators. We look for services to drive the pullback in January, with job losses concentrated across accommodation/food services, retail trade, recreation, and education. Job losses should drive the unemployment rate to 6.4% in January, alongside a pullback in labour force participation. This deterioration should be short-lived, however, with the labour market expected to bounce back in Feb/Mar.”

Citibank

“Citi: -120K, median: -100K, prior: 78.6K, Unemployment Rate – Citi: 6.4%, median: 6.2%, prior: 6.0%, Average Hourly Wages Permanent Employees – Citi: 1.9%, prior: 2.7%. After two months of much stronger than expected employment gains, We expect a decline in employment. Job losses though should be tied to Omicron and the decline is likely to be very temporary.”