British Columbians should be prepared for a peak unemployment rate of 14 per cent this year as the pandemic brings much of the economy to a standstill, according to a new forecast from the Conference Board of Canada.
The Ottawa-based think tank’s Wednesday (April 15) outlook predicts the peak of unemployment will come during the second quarter of 2020 before easing downward and ultimately averaging eight per cent for the year.
The unemployment rate currently sits at 7.2 per cent, according to Statistics Canada’s data compiled midway through last month.
“Temporary store shutdowns and restrictions on international and cross-border travel will lead to job losses in some B.C. sectors, although most should be recovered as the pandemic passes and economic activity is restored,” the Conference Board said in its report.
It forecasts a total of 104,300 jobs will be lost over the course of the year.
Statistic Canada’s March unemployment figures couldn’t quite paint a full picture amid the pandemic.
The Labour Force Survey was conducted March 15-21 — before much of the pandemic’s impact on the job market had been realized.
But the preliminary data showed B.C. lost 132,000 last month, while the unemployment rate climbed 2.2 percentage points to 7.2 per cent.
“With people stuck at home and a sharp pullback projected in consumer demand, we expect large declines across the province’s consumer-facing sectors. In particular, food services, accommodations, retail, entertainment, and the arts and cultural industries are all set for significant contractions this year,” the Conference Board said.
“However, when the restrictions are eventually lifted, consumer demand will rebound.”
The think tank predicts B.C.’s economy is now set to contract 3.2 per cent this year compared with its pre-pandemic estimate of 3.1 per cent growth.
Statistics Canada released a “nowcast” on Wednesday that revealed the nation’s GDP shrank nine per cent in March, the largest one-month decline since the national agency began tracking the data in 1961.
The cratering of the economy in March makes for a 2.6 per cent decline in GDP for the first quarter of 2020.
Unusual for the Bank of Canada, however, was that it did not offer a forecast for the economy following its rate announcement in the morning.
The central bank, which maintained its overnight rate of 0.25 per cent following two unscheduled cuts the month before, said it would be problematic to release such a forecast amid ongoing economic uncertainty.
The Conference Board, meanwhile, sees B.C.’s real GDP growing by 6.3 per cent in 2021 as the economy begins to rebuild in the second half of 2020.
“The construction sector should remain a bright spot. Although some projects have been delayed, construction work is expected to continue on the LNG Canada and Site C developments,” the outlook stated.
