Economy delivering mixed signals for July

Fri Aug 5, 2011 11:35am EDT
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By Randall Palmer

OTTAWA (Reuters) - Canada's economy showed mixed signs in July, with jobs being added and the unemployment rate falling to the lowest since December 2008, but with the pace of purchasing managers' activity plunging.

The statistics released on Friday provide one of the first glimpses into the third quarter, after a sickly second quarter, with markets looking for any underlying strength amidst current turmoil.

Statistics Canada said that 7,100 new jobs had been added and the jobless rate had fallen to 7.2 percent in July from 7.4 percent in June.

While a large part of change in the unemployment rate was due to people dropping out of the labor market, the quality of jobs improved, shifting from part time to full time and from public sector to private sector.

"Looking beyond the so-so headline, almost every detail in the (jobs) report is quite strong. We saw solid full-time gains, the private sector accounted for all the job gains and surprisingly the unemployment rate fell," BMO Capital Markets deputy chief economist Douglas Porter said.

"Overall, I would actually characterize this as good news, even though the headline employment number was a bit below consensus. I think the details are unambiguously better than the headline would suggest."

The median forecast in a Reuters survey of analysts was for 15,000 new jobs and a 7.4 percent unemployment rate. July saw 25,500 new full-time positions while 18,400 part-time ones were lost.

The recession did not hit Canada as hard as the United States. The Canadian rate had peaked at 8.7 percent in August 2009; the U.S. rate has only fallen to 9.1 percent in July this year from 9.2 percent and still is almost two points higher than in Canada. Markets were nonetheless briefly encouraged by the 117,000 increase in nonfarm payrolls in the United States.   Continued...