Canada unexpectedly sheds jobs; trade gap hits record

Fri Aug 5, 2016 10:45am EDT
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By Leah Schnurr

OTTAWA (Reuters) - Canada unexpectedly shed jobs last month, sending the unemployment rate higher even as fewer people were looking for work, and a lackluster gain in exports in June raised questions of whether the central bank's outlook was too sunny.

The nation lost 31,200 jobs in July, Statistics Canada said on Friday, frustrating economists' expectations for a gain of 10,000. The decline was driven by a 71,400 drop in full-time positions, while the goods-producing and service sectors of the economy fared poorly.

The jobs report "obviously reinforces the point that the Canadian economy is struggling to make any headway," said Doug Porter, chief economist at BMO Capital Markets. "We're seeing next to no job growth on a year-over-year basis."

The unemployment rate edged up to 6.9 percent, while the participation rate slipped to 65.4 percent.

The Canadian dollar weakened sharply against the greenback as the data contrasted with stronger-than-expected U.S. job growth. [CAD/]

While Canada's employment figures can be volatile month-to-month, Friday's report was compounded by the disappointing trade figures, Porter said.

Canada's trade gap unexpectedly widened to a record deficit of C$3.63 billion ($2.79 billion) in June as imports of motor vehicles and parts jumped.

Although exports rose 0.6 percent, that was largely due to a jump in prices, with volumes down 1.4 percent. Exports fared worse in the second quarter overall, tumbling 4.7 percent in the largest decline in seven years.   Continued...

Overhead view of the 2014 Spring National Job Fair and Training Expo in Toronto, April 3, 2014. REUTERS/Aaron Harris