Canada jobs recovery stalls in December

Fri Jan 8, 2010 9:53am EST
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By Louise Egan

OTTAWA (Reuters) - The recovery in Canada's job market stalled in December as employers unexpectedly cut 2,600 jobs after hefty hiring in November, another sign the economic revival will be sluggish rather than in leaps and bounds.

The data released by Statistics Canada on Friday showed the unemployment rate remained unchanged at 8.5 percent, as forecast in a Reuters poll.

The job losses, which followed a 79,000-job gain in November, are small enough to be considered a flat reading but disappointed the market consensus of a 20,000 increase.

The Canadian dollar fell immediately after the report but economists focused on evidence the economy is holding on to gradual gains made over the past few months.

"This is consistent with an economy that is on the mend but at a relatively moderate pace," said Don Drummond, chief economist at Toronto-Dominion Bank.

The Canadian dollar fell as low as C$1.0386 or 96.28 U.S. cents, from C$1.0314 or 96.96 cents just before the report.

The currency fully regained the lost ground 90 minutes later, however, after U.S. data showed 85,000 job losses in December. It touched C$1.0306, or 97.03 U.S. cents after that report.

The Bank of Canada is likely to shrug off the worse-than-expected numbers when it sets interest rates on January 19. It is widely expected to keep its benchmark interest rate at an all-time low of 0.25 percent until mid-year.   Continued...

<p>A man looks at a job board at a job fair in Toronto in this April 1, 2009 file photo. Canada's labor market recovery stalled in December, unexpectedly losing 2,600 jobs after hefty gains in November, according to Statistics Canada data released on Friday. REUTERS/Mark Blinch</p>