Canadian job growth stuns; government to aid banks

Fri Oct 10, 2008 11:46am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian economy created more than 10 times the number of jobs expected in September, figures released on Friday showed, while the government unveiled a plan to buy insured mortgages to help cushion banks from the global financial crisis.

The headline number on the jobs report, followed by a solid trade surplus figure, seemed to defy concerns that global forces could sweep up Canada's relatively healthy banking system and push its economy into a sharp downturn.

That could give a boost to Canada's governing Conservatives, who are looking to secure at least a minority government in next Tuesday's federal election.

"The jobs number is telling you the economy was in OK shape before the proverbial you-know-what hit the fan. Now, looking forward, the crisis is in full swing, it's spreading across the Canadian border," said Michael Gregory, senior economist at BMO Capital Markets.

"To ensure that we don't run into any difficulties like they have in the U.K. or the U.S. or in Europe, in Russia or anywhere, the government is taking preemptive steps here to ensure that liquidity and funding costs remain reasonable and that the Canadian economy doesn't accelerate too quickly."

Statistics Canada said the economy added 107,000 jobs last month, which humbled estimates for a gain of 9,000 jobs and easily beat August's gain of 15,200 jobs.

And even though the number was the biggest monthly gain since Statscan started collecting similar data in 1976, it did little to alter expectations for more Bank of Canada rate cuts since the bulk of the increase came from part-time employment.

Some economists said the report may be considered "old news" since it was compiled in the middle of September, just as the financial turmoil began to gather momentum.   Continued...