Canadian economy sheds more jobs in December

Fri Jan 9, 2009 11:43am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Louise Egan

OTTAWA (Reuters) - Canada's jobless rate jumped to a two-year high in December and the housing market began to crumble, reports showed on Friday, adding to growing evidence the economy slid into a recession late last year.

Statistics Canada said employers cut a net 34,400 jobs in December, more than expected, and the unemployment rate jumped to 6.6 percent from 6.3 percent. The construction sector took the biggest hit.

The news prompted a decline in the Canadian dollar versus the U.S. dollar and cemented the market's view that the Bank of Canada will aggressively cut interest rates on January 20.

Finance Minister Jim Flaherty warned that worse was still to come.

"We're in for a very difficult year. We regrettably are going to have to expect continuing job losses in Canada," Flaherty told reporters in Thornhill, Ontario.

Flaherty said he would address growing unemployment in his budget on January 27, mentioning possible measures to encourage retraining and job-sharing.

The downturn in construction -- and housing in particular -- was confirmed by another report showing housing starts fell 0.4 percent in December after plummeting to a seven-year low in November.

November building permits -- an early indicator of construction activity -- signaled the growing cracks in the housing market. The overall value of permits fell 11.8 percent in the month to a 21-month low and residential permits sank 9 percent.   Continued...

<p>Construction is shown near the CN Tower in Toronto in this May 1, 2008 file photo. Canadian employers cut more jobs in December than expected for a net job loss of 34,400, with the construction sector posting the biggest declines, Statistics Canada said on Friday. REUTERS/ Mike Cassese</p>