UPDATE 2-Canada adds more jobs than expected in August, yearly growth soft

Fri Sep 9, 2016 9:45am EDT
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(Adds details, economist quotes, market reaction, byline)

By Leah Schnurr

OTTAWA, Sept 9 (Reuters) - Canada created more jobs than expected in August on increased hiring in the construction and services sectors, but the gains did not fully make up for recent declines in employment, pointing to a labor market that was struggling to gain momentum.

Canada added 26,200 jobs in August, Statistics Canada said on Friday, following two months of declines. The unemployment rate rose to 7.0 percent as more people were looking for work.

Economists were encouraged by the 52,000 gain in full-time work, but noted the report could be volatile month-to-month. Compared to a year ago, employment was up just 0.4 percent.

"It's still been a really challenging year for the job market," said Doug Porter, chief economist at Bank of Montreal.

"We're still seeing just modest job growth over the past year."

The economy shrank in the second quarter, hurt by the impact of wildfires in Alberta, but analysts expect to see a recovery in the third quarter.

The Bank of Canada earlier this week said it still expects growth to rebound in the second half of the year, but warned the economy could be weaker than it had anticipated.   Continued...