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

Interior Health reported 91 new COVID-19 cases in the region Jan. 20, 2021 and three additional deaths. (Jennifer Smith - Morning Star)
95 new COVID-19 cases in Interior Health, two deaths

Another member of Vernon’s Noric House has passed

Fiction writing contest
A call to writers in the Okanagan

UBCO holds annual fiction writing contest

Vaccine rollout is focused on health care workers first, especially those dealing with long-term care facilities. (Nathan Denette - Canadian Press)
General public shouldn’t expect vaccines until fall: Interior Health

Interior Health focused on vaccinating long-term and first-line care workers

A mother hold hands with her daughter while sharing about her struggles with addiction during Overdose Awareness Day. (Jesse Major/Black Press file)
Overdose and suicide support group starts in Penticton

Penticton was one of the province’s communities hardest hit by the overdose crisis in 2020

The Regional District of Okanagan-Similkameen has given first reading to its 2021 budget. (RDOS image)
Regional District of Okanagan-Similkameen budget to rise by 2.8 per cent

Impact of budget increase will not be the same in all communities or electoral areas

Businesses continue to struggle under COVID-19 restrictions as the pandemic reaches the one-year mark. (B.C. government)
Another 564 COVID-19 cases, mass vaccine plan coming Friday

15 more deaths, community cluster declared in Williams Lake

Premier John Horgan leaves the podium following his first press conference of the year as he comments on various questions from the media in the Press Gallery at B.C. Legislature in Victoria, B.C., on Monday, January 13, 2020. THE CANADIAN PRESS/Chad Hipolito
Interprovincial travel restrictions a no-go, Horgan says after reviewing legal options

The B.C. NDP government sought legal advice as concerns of travel continue

Kevin Lee Barrett is charged with attempted murder and aggravated assault. (Facebook)
Court hears of victim’s injuries in West Kelowna attempted murder trial

Two-week-long trial continues for Kevin Barrett, accused of trying to kill mother in West Kelowna

Robert Riley Saunders. (File)
Disgraced Kelowna social worker faces another class-action lawsuit

Zackary Alphonse claims he was not informed of resources available to him upon leaving government care

Jan. 21 marks the 21st day of the 21st year of the 21st century, according to some. (Black Press Media file photo)
The 21st day of the 21st year of the 21st century is upon us

Milestone won’t be back for another 100 years

McBain Insurance in Summerland gave a donation of $816 to Angus Place. The money will go towards a new floor in the bathing room in the seniors care facility. From left are Chris Emmons of McBain Insurance, Stacey Schieman of McBain Insurance and Charmaine Kramer of Parkdale Place Housing Society. (Contributed)
Donation to help with bathing room work at Summerland seniors facility

Earlier contribution will be used to replace aging tub at Angus Place

The steel mills in the Hamilton waterfront harbour are shown in Hamilton, Ont., on Tuesday, October 23, 2018. THE CANADIAN PRESS/Nathan Denette
Dyer: Stay the course on Carbon pricing

Kristy Dyer has a background in art and physics and consulted for Silicon Valley

Gem Lake Top, at Big White Ski Resort, seen at Jan. 8. (Big White Ski Resort)
Big White cancels $7.3M in lift tickets, accommodations due to COVID-19 orders

Since November, the ski resort has been forced to make several changes

Voting is the number one, bare minimum way to have your voice heard by government. (File photo)
Jocelyn’s Jottings: Want to make change? Here are some suggestions

As a citizen you have a voice, you just have to know who to talk to

Most Read