Canada data dashes hopes of quick economic rebound

Fri Sep 9, 2011 11:13am EDT
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By Louise Egan

OTTAWA (Reuters) - Weak jobs and housing starts data for August doused any hopes for robust growth after a bleak second quarter, underscoring its vulnerability to a struggling U.S. economy and the widening European debt crisis.

Canada's job market had outperformed that of the United States since the recession but it is now looking startlingly similar, stalling for two months in a row.

The Canadian dollar weakened to a one-month low after Statistics Canada said on Friday net job losses in the month totaled 5,500, nearly erasing the meek 7,100 gain in July. The unemployment rate rose to 7.3 percent from 7.2 percent.

"While it seems surprising considering our very strong record in recent months, it's not surprising given the problems that we saw accumulate in the first half of the year which basically peaked in the summer months," said Aron Gampel, deputy chief economist at Scotiabank.

"I would look at it as a part of this process of adjustment to a slower growth trajectory in North America and around the world and it highlights the increasing uncertainty by businesses toward the job market."

The economy has generated a net 223,000 jobs in the past year and as of the second quarter, it had recovered all the full-time jobs lost during the recession. The jobless rate is two percentage points lower than that of its top trade partner.

However, the latest numbers echo dismal U.S. employment reports that prompted President Barack Obama to propose a $447 billion jobs package on Thursday to jump-start the sagging economy.

The data adds to economic gloom weighing heavily on finance leaders from the Group of Seven industrialized economies, as they meet on Friday in Marseille, France to chart a way out of trouble.   Continued...

<p>A woman walks past the Bank of Canada building in Ottawa September 7, 2011. REUTERS/Chris Wattie</p>