Canada posts surprisingly high job gains

Fri Oct 9, 2009 7:51am EDT
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By Louise Egan

OTTAWA (Reuters) - Canadian employers hired six times more workers than expected in September, knocking down the unemployment rate for the first time since July 2008 in another sign the economy is rebounding from a deep recession.

Statistics Canada reported net job gains of 30,600 in the month, compared with the consensus forecast of a 5,000 increase and following gains of 27,100 in August. The jobless rate fell to 8.4 percent from 8.7 percent in August while analysts had expected it to rise to 8.8 percent.

The Canadian dollar rallied to a fresh one-year high after the report, touching C$1.0423 to the U.S. dollar, or 95.94 U.S. cents, up from around C$1.05 just before the release.

The data "headily topped expectations," said Doug Porter, deputy chief economist at BMO Capital Markets.

"Some of the strengths might be slightly overstated by seasonal factors but that doesn't seem to have played an overwhelming role here so I think there is some real underlying strength," he said.

Employment was still down 2.1 percent from a peak last October, even though the labor market has been largely steady since March of this year.

Still, the September gains affirmed the Bank of Canada's view that the economy will grow more sharply in the second half of this year than it had previously anticipated. The bank is not yet certain if that strength will extend into 2010 but will provide more detailed forecasts in an October 22 report.

Economist Derek Holt of Scotia Capital said the two consecutive months of robust job gains suggest the central bank may forfeit its conditional pledge to keep rates at their historic low of 0.25 percent at least until the end of June 2010.   Continued...

<p>A man looks at a job board posted at a job fair in Toronto, April 1, 2009. REUTERS/Mark Blinch</p>