Canada reports August job losses

Fri Sep 9, 2011 7:32am EDT
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OTTAWA (Reuters) - Canada's economy surprised markets by reporting net job losses in August, overshadowing other signs the economy was making a comeback after a bleak second quarter, and keeping central bank rate hikes off the table.

The unemployment rate rose in the month to 7.3 percent from 7.2 percent, Statistics Canada said on Friday.

Net job losses totaled 5,500, far worse than the median market forecast of a gain of 25,000 and matching only the most bearish estimate in a Reuters survey of 23 analysts.

Canada's job market has appeared healthier than in the United States since the recession, but the latest numbers are more in line with sobering U.S. employment reports that prompted U.S. President Barack Obama to propose a $447 billion jobs package on Thursday to jump-start the sagging economy.

"Disappointing," said Sal Guatieri, senior economist at BMO Capital Markets.

"We are seeing the lagged effect of the economy contracting slightly in the second-quarter on labor markets now," he said.

The Canadian dollar dropped to C$0.9551 against the U.S. dollar, or $1.0049, compared to C$0.9927, or $1.0074, heading into the release.

However, some of the details from Canada were less grim, with 25,700 full-time jobs created versus a loss of 31,200 part-time positions. Hiring was strong in the public sector and in services industries.

The economy has generated 223,000 net jobs in the past year, or a 1.3 percent increase. As of April this year, it had recovered all the full-time jobs lost during the recession.   Continued...