The disruption of the omicron wave made its way into the Canadian labour market in January. Employment fell by a similar magnitude to January and April of last year, with pandemic exposed sectors leading the decline, especially in Ontario and Quebec. Overall, the share of Canadians with a job fell back to just below levels seen last September. 

Rising COVID-19 cases didn’t only dent the job numbers but also impacted work in other ways: total hours worked fell at over twice the rate of employment decline. This partly reflected the pandemic directly, with the number of workers absent due to illness and disability jumping above typical January levels. 

The setback to Canada’s employment recovery doesn’t come as a surprise. The focus now is on the path forward. With rules around indoor dining relaxing in some provinces, some of the jobs lost are likely to return quickly. A decent share of January’s net employment decline showed up in a jump in temporary unemployment, indicating that at least some affected workers expect to return to their previous positions. 

The Canadian labour market showed an impressive ability to rebound after previous waves last year, and some of the prevailing conditions that helped the recovery, like elevated employer hiring appetite, remain. Progress should get back on the right track, but will require ongoing positive economic momentum to sustain it.