Canada lost more than one million jobs in March during the initial stages of the COVID-19 pandemic, Statistics Canada reported Thursday, with economists warning that the worst is yet to come.

“We knew it was going to be grim and I think we’re going to be seeing even worse numbers in the next couple of weeks,” said Ted Mallett, vice-president and chief economist at the Canadian Federation of Independent Business.

The economy lost 1,011,000 jobs in March, the worst recorded single-month drop. Ontario alone lost more than 400,000 jobs.

“It is expected that the sudden employment decline observed in March will have a significant effect on the performance of the Canadian economy over the coming months,” says StatsCan’s March labour force survey. “The employment decline in March was larger than in any of three significant recessions experienced since 1980.”

Some economists were suggesting Thursday that not all lost jobs will make a return once the pandemic subsides, which could dash hopes of a V-shaped economic recovery.

“As shocking as these numbers are, the big issue is how long do the shutdowns last, and thus how persistent is this spike in joblessness; that is still very much open for debate,” said BMO chief economist Doug Porter in a note Thursday. “We continue to assert that as distancing measures lighten, many jobs will return quickly ... many, but clearly not all.”

The StatsCan results were released the same day as a separate report from the parliamentary budget officer showing that the federal budget deficit for the just-closed fiscal year will go up by $27.4 billion due to a massive increase in spending by government to respond to COVID-19 and a decrease in economic activity.

The deficit for the fiscal year that began April 1 is forecasted to top $184.2 billion, budget officer Yves Giroux reported Thursday, while suggesting that even more spending may be needed to support workers and businesses.

StatsCan surveyed labour conditions for the week of March 15 to 21, by which time many provincial governments had declared states of emergency and shut down or severely limited the operations of non-essential businesses to slow the spread of COVID-19.

The number of people considered unemployed rose by 413,000 between February and March, almost all the result of temporary layoffs. The unemployment rate rose by 2.2 per cent to 7.8 per cent.

The number of people who didn’t work any hours during the week of the survey increased by 1.3 million, while the number who worked less than half of their usual hours increased by 800,000 — also attributed to COVID-19, StatsCan said.

In total, 3.1 million Canadians were affected by either job losses or reduced hours. Most of the job losses were in the private sector.

“We’re seeing an impact on younger, female, low-wage workers in particular,” David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, told the Star.

He pointed out that one in five women, one in four youth (aged 15 to 24) and one in three low-wage workers making $14/hour or less either lost their jobs or saw a majority of their hours cut.

Macdonald said the March numbers are a “prelude” to the full impact of COVID-19 on the labour market.

In a blog post Thursday, Macdonald wrote that while the unemployment rate is not yet at historic levels, the number of people who have seen their hours slashed is a “harbinger of things to come.”

He also highlighted that the unemployment rate doesn’t tell the full story in terms of joblessness in Canada. A person who lost their job due to COVID-19 and stopped looking for work “because you (reasonably) predicted you wouldn’t find any in the worst labour market since the Depression” would not be considered unemployed, but rather “outside the labour force,” Macdonald wrote in his blog post.

The number of people outside the labour force rose by 644,000 in March, StatsCan said.

Of those, 219,000 had worked earlier in March and wanted a job but didn’t search for one, an increase of 193,000, or 743 per cent.

“Because they had not looked for work and they were not temporarily laid off, these people are not counted as unemployed,” StatsCan said. “Since historically the number of people in this group is generally very small and stable, the full monthly increase can be reasonably attributed to COVID-19.”

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The agency said if the 219,000 people had been counted as unemployed, the unemployment rate would actually rise to 8.9 per cent.

Governments have announced a series of policies in response to the massive job losses. Out-of-work Canadians began applying this week for the $2,000 a month Canadian Emergency Response Benefit established by the federal government.

The feds have also announced a 75 per cent wage subsidy in a bid to encourage employers to keep their staff on the payroll.