The Bank of Canada building is seen in Ottawa, Wednesday, April 15, 2020. THE CANADIAN PRESS/Adrian Wyld

The Bank of Canada building is seen in Ottawa, Wednesday, April 15, 2020. THE CANADIAN PRESS/Adrian Wyld

Pandemic job concerns could pose problem in long-term, Bank of Canada says

Lockdowns in the spring of 2020 led to a historic drop in employment with about three million jobs lost

Consumers’ concerns about finding work during the pandemic could signal longer-term problems for the country’s labour market, the Bank of Canada says.

The central bank’s quarterly survey on consumer expectations showed that respondents believed they were less likely to find a new job if they lost their current one.

Although respondents were less concerned about losing their current jobs, they were also less likely to leave their job voluntarily, suggesting that Canadians remain concerned about the health of the job market.

Bank of Canada officials wrote that people appear unwilling to change jobs until the situation normalizes. That means less “moving up” between jobs that the bank warned could weigh on future wage growth and lead to lower productivity that would impact the economy overall.

The survey of consumer expectations was conducted during November just as COVID-19 case counts started to rise nationally, but before lockdowns in some provinces.

Lockdowns in the spring of 2020 led to a historic drop in employment with about three million jobs lost. Asked whether new restrictions would be better or worse economically, three-quarters of respondents in the survey said they expected lockdowns now to have a similar or slightly smaller impact on their hours worked, earnings and spending.

“Most respondents do not expect the threat from COVID‑19 to diminish before the second half of 2021,” the report said.

“Expectations among many for a slow return to normal — or even no return to normal for some — suggest the possibility of a lasting impact from the crisis.”

Heading into the end of 2020, the outlook overall seemed to be more positive than it was a few months earlier. Despite rising case counts, there was also positive news about vaccines.

The bank’s quarterly business outlook survey also released Monday suggested business sentiment improved in line with news about vaccines, with more companies saying they planned to hire and invest than in the fall of 2020.

However, the bank said most businesses don’t expect the positive impacts of vaccinations to materialize until later this year.

Nor are the impacts going to be widespread. The business outlook survey noted that one-third of companies polled didn’t expect their sales to return to pre-pandemic levels in the next 12 months.

“Despite the upbeat headline figures, the underlying story is mixed with services sectors continuing to struggle amid ongoing restrictions,” wrote BMO’s Benjamin Reitzes in an analysis.

“Still, with the vaccine being distributed the outlook is brighter than it was a quarter ago.”

Also contributing to the positive outlook for businesses was ongoing government aid programs.

Households expected interest rates to stay lower than their pre-pandemic levels for the next two years. The report noted that views about access to consumer credit deteriorated from the previous quarter “to their lowest level so far, indicating tighter credit conditions since the onset of the pandemic.”

The central bank’s next scheduled rate announcement is on Jan. 20, when the Bank of Canada will also release its updated economic and inflation outlook.

Bank of Canada governor Tiff Macklem has said repeatedly the bank’s key policy rate will remain at 0.25 per cent, which is as low as the bank has said it is willing to go, until an economic recovery is well underway.

CIBC senior economist Royce Mendes wrote that the results in the two surveys don’t point to any need by the Bank of Canada to take immediate monetary action.

“While both surveys were taken well-before the latest spike in virus cases and the associated necessary shutdowns, they suggest that businesses and households saw light at the end of the tunnel,” Mendes wrote.

“The erosion of longer-term inflation expectations in the consumer survey might provide central bankers with a bit more cause for concern.”

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

As of Friday, Alberta has under 10,000 active COVID-19 cases. (Image courtesy CDC)
Three new COVID-19 deaths in Central zone, Alberta under 10,000 active cases

The Central zone sits at 849 active cases, with 52 people in hospital and 10 in the ICU.

Alberta’s chief medical officer of health Dr. Deena Hinshaw announced 16 additional deaths Thursday. (Photo by Chris Schwarz/Government of Alberta)
No easing of Alberta’s COVID-19 measures Thursday, 678 new COVID-19 cases

The province also hit 1,500 COVID-19 deaths since the beginning of the pandemic

Dean Olsen Missing Poster
Blackfalds RCMP seek public assistance to locate missing male

Dean Olsen was last seen on Jan. 20 in Red Deer County

Alberta Premier Jason Kenney said the Canadian government should consider sanctions on the U.S. if they refuse to reconsider the decision to cancel the Keystone XL Pipeline. (THE CANADIAN PRESS/Sean Kilpatrick
Keystone XL officially cancelled, Kenney vows to fight on

U.S. President Joe Biden cancelled the presidential permit for the pipeline on first day of office

Alberta’s chief medical officer of health Dr. Deena Hinshaw said province’s test positivity rate for COVID-19 is steadily declining. (Photo by Chris Schwarz/Government of Alberta)
669 new COVID-19 cases in Alberta, 21 additional deaths

COVID-19 test positivity rate down to 4.5 per cent

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, updates media on the COVID-19 situation in Edmonton, Friday, March 20, 2020. Hinshaw says residents in long-term care and supportive living facilities will remain the priority as the province grapples with a looming slowdown in COVID-19 vaccine supply. THE CANADIAN PRESS/Jason Franson
Alberta long-term care residents remain priority in looming slowdown of COVID vaccine

There are 119 patients in intensive care and 1,463 people have died

FILE - In this Feb. 14, 2017, file photo, Oklahoma State Rep. Justin Humphrey prepares to speak at the State Capitol in Oklahoma City. A mythical, ape-like creature that has captured the imagination of adventurers for decades has now become the target of Rep. Justin Humphrey. Humphrey, a Republican House member has introduced a bill that would create a Bigfoot hunting season, He says issuing a state hunting license and tag could help boost tourism. (Steve Gooch/The Oklahoman via AP, File)
Oklahoma lawmaker proposes ‘Bigfoot’ hunting season

A Republican House member has introduced a bill that would create a Bigfoot hunting season

FILE - In this Nov. 20, 2017, file photo, Larry King attends the 45th International Emmy Awards at the New York Hilton, in New York. Former CNN talk show host King has been hospitalized with COVID-19 for more than a week, the news channel reported Saturday, Jan. 2, 2021. CNN reported the 87-year-old King contracted the coronavirus and was undergoing treatment at Cedars-Sinai Medical Center in Los Angeles. (Photo by Andy Kropa/Invision/AP, File)
Larry King, broadcasting giant for half-century, dies at 87

King conducted an estimated 50,000 on-air interviews

Black Press File Photo
Maskwacis RCMP lay charges for attempted murder, kidnapping, and flight from police

Female victim remains in hospital in serious condition.

In this Dec. 18, 2020 photo, pipes to be used for the Keystone XL pipeline are stored in a field near Dorchester, Neb.  THE CANADIAN PRESS/AP-Chris Machian /Omaha World-Herald via AP
‘Gut punch’: Alberta Premier Jason Kenney blasts Biden on revoked Keystone XL permit

Kenney said he was upset the U.S. wouldn’t consult with Canada first before acting

Joe Biden, then the U.S. vice-president, and Prime Minister Justin Trudeau take their seats at the start of the First Ministers and National Indigenous Leaders meeting in Ottawa, Friday, Dec. 9, 2016. THE CANADIAN PRESS/Adrian Wyld
Trudeau, Biden to talk today as death of Keystone XL reverberates in Canada

President Joe Biden opposed the Keystone XL expansion as vice-president under Barack Obama

Prince Edward Island’s provincial flag flies on a flag pole in Ottawa, Friday July 3, 2020. A lozenge plant in Prince Edward Island has laid off 30 workers, citing an “almost non-existent” cold and cough season amid COVID-19 restrictions. THE CANADIAN PRESS/Adrian Wyld
‘Almost non-existent’ cold and cough season: P.E.I. lozenge plant lays off 30 workers

The apparent drop in winter colds across the country seems to have weakened demand for medicine and natural remedies

Gov. Gen. Julie Payette takes the royal salute from the Guard of Honour as she makes her way deliver the the throne speech, Wednesday, September 23, 2020 in Ottawa. THE CANADIAN PRESS/Fred Chartrand
Gov. Gen. Julie Payette resigns, apologizes for ‘tensions’ at Rideau Hall

Payette, who is the Queen’s representative in Canada, has been the governor general since 2017

Grounded WestJet Boeing 737 Max aircraft are shown at the airline’s facilities in Calgary, Alta., Tuesday, May 7, 2019. WestJet will operate the first commercial Boeing 737 Max flight in Canada today since the aircraft was grounded in 2019 following two deadly crashes. THE CANADIAN PRESS/Jeff McIntosh
Passengers unfazed as WestJet returns Boeing 737 Max to service on Calgary flight

After a lengthy review process, Transport Canada cleared the plane to return to Canadian airspace

Most Read