Canada's jobless rate unexpectedly drops in January

Fri Feb 5, 2010 8:34am EST
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By Randall Palmer

OTTAWA (Reuters) - Canada's unemployment rate fell to 8.3 percent in January, its lowest rate since September, from 8.4 percent in December as the economy added 43,000 jobs, Statistics Canada said on Friday.

Economists surveyed by Reuters had predicted an unemployment rate of 8.5 percent and an increase of 15,000 jobs.

Almost all of the new jobs were part-time, to some extent reflecting the first notable increase in youth employment since the fall of 2008. The youth jobless rate fell to 15.1 percent from 16.0 percent.

Bank of Canada Governor Mark Carney said on Thursday he would be looking carefully at the labor market in crafting monetary policy. Canada's unemployment rate has been more than 1-1/2 percentage points less than the U.S. figure.

The Canadian dollar rose as high as C$1.0716 or 93.32 U.S. cents, from C$1.0749, or 93.03 U.S. cents just before the report, but BMO Capital Markets deputy chief economist, Doug Porter, said there was less than meets the eye in the report.

"I don't think there's a big shock here for the Bank. The fact the unemployment rate is grinding lower will be notable, but I don't think it's enough to put the Bank on high alert by any means," he said.

Aron Gampel, deputy chief economist at Scotiabank, saw the data as positive even though he said the gains weren't as broad-based as hoped.

"The issue here is that the Canadian economy is slowly but surely gaining momentum. It would be much stronger if not for the fact that the trade side remains a drag at a time when domestic demand is doing extremely well," he said.   Continued...

<p>The Bay Street sign is pictured in the heart of the financial district as people walk by in Toronto, May 22, 2008. REUTERS/Mark Blinch</p>