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OTTAWA (Reuters) - Canada shed fewer jobs than expected last month, but losses in the natural resource sector, particularly in oil-rich Alberta, suggested the country's oil-exporting economy was starting to feel the effects of sharply lower crude prices.
In its February employment report on Friday, Statistics Canada said full-time employment increased in Ontario, but manufacturing jobs fell in the province, Canada's industrial heartland, and nationally.
Economists have said the drop in the Canadian dollar due to lower oil prices might allow manufacturing to pick up the slack from the slowing resource sector.
The economy shed 1,000 jobs in February, shy of the decline of 5,000 analysts had forecast. An increase in the overall workforce participation level sent Canada's unemployment rate up to 6.8 percent from 6.6 percent.
The natural resource sector, which includes oil and gas extraction, cut 16,900 jobs, with most of the losses coming in Alberta and British Columbia. Over the past two months, the sector has lost 26,000 positions.
"We're starting see some oil shock weighing through on the employment numbers," said Mazen Issa, macro strategist at TD Securities.
In the province of Alberta, home of huge oil sands deposits, 14,000 jobs were lost last month and the unemployment rate jumped to 5.3 percent, its highest since September 2011.
"Alberta is finally paying the piper," said Sal Guatieri, senior economist at BMO Capital Markets.
Job cuts were seen in a number of industries in the province, which has lost 20,000 natural-resource jobs since a peak in September.
Overall, the details of the jobs report were mixed. Full-time positions increased by 34,000, but 34,900 part-time jobs were lost.
The number of people employed in manufacturing fell by 19,900, the sector's first decline since August. The bulk of the losses occurred in Ontario and Alberta. Hiring in construction picked up by 15,500.
The labor participation rate rose to 65.8 percent from 65.7 percent, its highest level in three months.
Analysts said the report was unlikely to spur a policy change at the Bank of Canada. The central bank unexpectedly cut interest rates in January, citing a threat to economic growth and its inflation targets from the dramatic drop in oil prices. The Canadian dollar pared some early losses immediately following the release of the report.
Editing by Peter Galloway