Canada jobless rate at 4-year low even as growth slows

Fri Jan 4, 2013 2:04pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada's economy created far more jobs than expected in December and the jobless rate slid to a four-year low, bolstering the likelihood of a central bank interest rate rise later this year.

The economy added 39,800 jobs in December from November, Statistics Canada said on Friday, well above market expectations for 5,000 jobs and surpassing even the most bullish forecast in a Reuters poll of analysts.

In a report that appeared at odds with other figures pointing to sluggish growth, Statscan said the unemployment rate dipped to 7.1 percent from 7.2 percent in November.

It was the third surprisingly strong jobs report over the past four months and contrasted with the situation in the United States, where non-farm payrolls rose a disappointing 155,000 last month.

Analysts expected little Canadian hiring in December, ahead of a recent deal by U.S. lawmakers and the White House to avert potentially crippling austerity measures due to take effect early this year.

"My initial response is not only are they defying expectations, they are defying gravity," Doug Porter, deputy chief economist at BMO Capital Markets, said of the Canadian jobs numbers.

Canada has recovered all the jobs lost during the 2008-09 recession, although hiring has been unsteady as businesses fret about headwinds from the United States and Europe.

Prime Minister Stephen Harper said those headwinds could mean more "bumps in the road" for the Canadian economy and people should not get too excited by a single month's data.   Continued...

The Canadian flag is seen on top of a flagpole in the midst of high-rise buildings in the financial district of Toronto April 3, 2009. REUTERS/Mark Blinch