OTTAWA, Sept 4 (Reuters) - Canada unexpectedly added jobs in August, but the unemployment rate rose to a one-year high as more people looked for work.
Friday's report from Statistics Canada did not change expectations that the Bank of Canada would hold rates steady when it meets next week after cutting them twice this year to try to revive the stalled economy.
The oil-exporting country fell into a modest recession in the first half of the year as it contended with the plunge in crude prices, but many economists and the Bank of Canada expect growth to perk up in the latter half of 2015.
Canada added 12,000 jobs last month. That surpassed economists' expectations for a decline of 4,500 jobs.
The unemployment rate rose to 7 percent after sitting at 6.8 percent for six consecutive months.
That was the highest level since it was at 7 percent in August 2014. The participation rate edged up to 65.9 percent from 65.7 percent.
"Overall, I think there's good news here that will offset the rise in the unemployment rate," BMO Capital Markets chief economist Doug Porter said, pointing to encouraging gains in full-time work.
"This is just another suggestion that the bank is likely to remain on hold," Porter said. "Things aren't weak enough to point to another rate cut by the Bank of Canada."
The job gains came entirely from full-time employment, with 54,400 positions added. The educational services and public administration sectors led the increases.
Some 42,400 part-time jobs were lost.
The natural resources sector, which has suffered from the downturn in oil, added a modest 2,300 jobs. In Alberta, where the country's vast oil sands are located, 4,700 jobs were created, while the unemployment rate remained at 6 percent.
The Canadian dollar briefly firmed to a session high against the greenback before softening as investors were also taking in the U.S. jobs report.
Economists said the Canadian report did not change expectations that the central bank would keep rates at 0.5 percent on Sept 9. Markets are pricing in a modest 18.1 percent chance of a cut.
A separate report showed the labor productivity of Canadian businesses fell 0.6 percent in the second quarter, while the previous quarter's decline was revised lower.
Additional reporting by Solarina Ho in Toronto; Editing by Lisa Von Ahn