Canada posts worst monthly job losses in more than four years

Fri Apr 5, 2013 11:23am EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada posted its worst monthly jobs loss in more than four years in March, another sign the economy is struggling to cope with weak foreign markets and a strong Canadian dollar.

Canada shed 54,500 positions in March, more than wiping out the 50,700 jobs that were added in February, Statistics Canada said on Friday. Market operators had expected a modest gain of 8,500 jobs.

It was the biggest monthly jobs loss since February 2009, when the economy shed 69,300 positions. The March unemployment rate rose to 7.2 percent from 7.0 percent.

"This was a lot weaker than expected ... so far this year it is pointing to weakening employment relative to strong gains in the second half of last year," said Paul Ferley, assistant chief economist at Royal Bank of Canada.

The economy's continuing challenges mean there is little pressure on the Bank of Canada to raise interest rates from near-record lows. "It's going to keep the Bank of Canada cautious," Ferley said.

Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that after the data traders increased their bets, albeit still small, on a rate cut in late 2013.

In January, the central bank forecast first-quarter economic growth of 2.3 percent, which now looks overly optimistic.

"The employment numbers did seem to be defying gravity up until March and were not lining up with the underlying growth numbers," said Doug Porter, chief economist at BMO Capital Markets. "We knew one of them had to give way and it looks as if employment has given way."   Continued...

People walk down Bay St in the heart of the financial district in downtown Toronto December 7, 2009. REUTERS/Mark Blinch