Modest Canada job gains ease rate hike pressures

Fri Apr 9, 2010 12:42pm EDT
 
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By Louise Egan

OTTAWA (Reuters) - Fewer Canadians returned to work in March than expected but the three-month hiring trend was the strongest since the financial crisis intensified in the autumn of 2008, suggesting the recovery is entrenched.

In the first disappointing employment report since December, the economy added 17,900 net jobs in March, following gains of 20,900 in February and 43,000 in January, according to Statistics Canada on Friday.

Analysts surveyed by Reuters had forecast a gain of 25,000 positions.

The modest employment gains takes some pressure off the Bank of Canada to raise interest rates and brought markets back to earth after speculation of a hike as early as June.

The Canadian dollar fell as low as C$1.0084, or 99.17 U.S. cents after the report, before partially retracing its steps. It was near parity with the U.S. dollar just before the data.

But economists said that while the gains were below estimates, the three-month average employment growth was the best in two years and reflects a steady economic recovery.

"It wasn't a barn burner report. There were certainly some who were looking for a stronger number based on the absence of stormy weather in Canada in March but it doesn't dramatically alter the fundamentals for the currency," said Avery Shenfeld, chief economist at CIBC World Markets.

Since the labor market began recovering last July, 176,000 people have found work, but that is less than half the number who lost their jobs in the nine months prior to July.   Continued...