By Julie Gordon
OTTAWA (Reuters) -Canada lost more jobs than expected in April as fresh restrictions to contain a variant-driven third wave of COVID-19 weighed on employers, Statistics Canada data showed on Friday.
Some 207,100 jobs were lost in April, more than the average analyst prediction for a loss of 175,000. The unemployment rate climbed to 8.1%, missing analyst expectations of 7.8%. Employment is now 2.6% below pre-pandemic levels.
"This episode seemed to be a little more impactful in that it led to a big decline in full-time jobs and specifically in private-sector employment," said Doug Porter, chief economist at BMO Capital Markets.
"There were some heavy hits in education and culture and recreation. So it seems like the third wave bit into other sectors a little bit more deeply than the second wave."
Full-time employment was down by 129,400 while part-time employment fell by 77,800 positions.
With many retailers shuttered in April and the restrictions also hitting hotels, food services and entertainment, service sector employment plunged by 195,400 jobs. Employment in the goods sector fell by 11,800.
As COVID-19 infections surged in April, a number of Canadian provinces imposed fresh restrictions, including shuttering or limiting non-essential businesses and closing schools. Cases are beginning to decline, but reopening is still weeks away and economists expect further job losses in May.
Canada has so far fully vaccinated just over 3% of its nearly 38 million residents, while more than 36% have received a first dose. By the end of June, Canada expects to have received 40 million doses.
Long-term unemployment increased by 4.6% to 486,000 people, which suggests some labor market scarring is beginning to show, said Leah Nord, a senior director at the Canadian Chamber of Commerce.
"The job prospects for displaced workers grow slimmer with every month in lockdown as more businesses throw in the towel," she said in a statement.
Total hours worked fell 2.7% in April, while the number of people working less than half their usual hours jumped 27.2% to 288,000.
"The hours worked numbers were I think weaker than had been expected," said Andrew Kelvin, chief Canada strategists at TD Securities. "I think it suggests a weaker April than the Bank of Canada would have had penciled in."
The Bank of Canada in April sharply boosted its outlook for the Canadian economy and signaled interest rates could start to rise in 2022.
The Canadian dollar was trading 0.3% lower at 1.2187 to the greenback, or 82.05 U.S. cents, after touching on Thursday its strongest level in 3-1/2 years at 1.2141.