Canada jobs bonanza comes to a halt in May

Fri Jun 8, 2012 3:07pm EDT
 
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By Louise Egan

OTTAWA (Reuters) - Canada's jobs bonanza came to an abrupt halt in May, but the negligible employment gain of 7,700 brought more relief than trepidation to jittery investors, who saw it as evidence the recovery is intact despite a worsening global backdrop.

The figures released by Statistics Canada on Friday, which also showed the unemployment rate holding steady at 7.3 percent, were below a median forecast of 10,000 net new jobs predicted by analysts in a Reuters poll.

Other data showed an unexpected trade deficit, slower housing starts and weak productivity growth, adding to pressure on policy makers as the European debt crisis deepens.

Still, few had thought the outsized employment gains of 82,300 jobs in March and 58,200 in April - the biggest two-month gain in over 30 years - would last. And the six-month average of 28,200 net new jobs monthly, the equivalent of about 260,000 in the much bigger U.S. economy, led analysts to take a glass-half-full view of the job market.

"The fact that we printed a positive was actually a very good sign. We did think that there was a chance that we could slip into negative territory," said Ian Pollick, fixed-income strategist at RBC Capital Markets.

Doug Porter, deputy chief economist at BMO Capital Markets was relieved that the employment report was within a more normal range after several months of volatility, and did not think it would add pressure on the Bank of Canada to postpone interest rate hikes.

"I don't think these numbers will make any impression at all on the Bank of Canada. It doesn't move the needle one iota," he said.

Unlike the United States, Canada's quick recovery from the 2008-09 recession included recouping all the jobs lost by early 2011. But job creation stalled late last year and the data have been extremely volatile in recent months.   Continued...