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OTTAWA (Reuters) - Canada created the most jobs in five months in October, sending the unemployment rate down as employment in the public administration sector jumped on hiring related to last month's election.
The economy added 44,400 jobs last month, data from Statistics Canada showed on Friday, handily topping forecasts for a gain of 10,000. The unemployment rate, which had drifted higher recently, eased to 7.0 percent from 7.1 percent.
Canada was in a mild recession in the first half of the year, but analysts expect the economy has already recovered and point to the resiliency of the labor market despite layoffs in the energy sector.
The Bank of Canada has cut interest rates twice this year to offset the shock of cheaper oil, but the surprisingly upbeat jobs figures reinforced expectations the central bank will hold its main policy rate at 0.5 percent when it next meets in December.
Nonetheless, economists said the details were less rosy, particularly the gain in part-time employment.
"As much as it's a very strong headline number the underlying is not quite as promising," said Andrew Kelvin, senior rates strategist at TD Securities. He said he expects to see a lot of the election influence unwound.
The Canadian dollar weakened against the greenback as traders were more focused on strong jobs figures south of the border that bolstered expectations the Federal Reserve could begin raising rates next month. [CAD/]
Employment in the public administration sector increased by 32,000 positions in October, coinciding with temporary hiring related to the federal election.
Even so, hiring picked up in other sectors, including a 17,600 increase in trade, and a 12,900 gain in accommodation and food services.
The overall job gains also came as the participation rate increased to 66.0 percent and brought the number of employed Canadians to over 18 million for the first time.
The increase in employment was the largest since May. Gains were primarily in part-time jobs, which rose by 35,400 positions compared to a 9,000 gain in full-time jobs.
But the natural resources sector, which has been hurt by the drop in commodity prices, continued to shed jobs with employment falling by 8,000. Over the past 12 months, the industry has lost 25,600 jobs, with most of the declines in Alberta.
Separate data showed the value of Canadian building permits unexpectedly tumbled for the second month in a row in September on a drop in construction intentions for residential buildings.
With additional reporting by Alastair Sharp, Fergal Smith and Susan Taylor in Toronto; Editing by Chizu Nomiyama