September 7, 2012 / 12:42 PM / 6 years ago

Canada adds 34,000 jobs in August, outpacing July loss

OTTAWA (Reuters) - The Canadian economy added 34,300 jobs in August, recouping all 30,400 positions lost in July, as it returned to the recent trend of slow net increases in employment, Statistics Canada data on Friday showed.

A man looks at a job board posted at a job fair in Toronto, April 1, 2009. REUTERS/Mark Blinch

The gains topped the expectations of analysts surveyed by Reuters. They predicted, on average, a gain of 10,000 jobs, and the highest prediction was for 25,000.

All the job gains were part time, mirroring part-time losses in July. The unemployment rate remained at 7.3 percent, as forecast, because more Canadians looked for work in August.

“It’s likely to support the already hawkish stance of the Bank of Canada. We’ve had a slew of some disappointing domestic data recently, so this is a positive development for the Canadian dollar,” Scotiabank chief currency strategist Camilla Sutton said.

That said, markets priced in a slimmer chance that the Bank of Canada will raise interest rates after the Canadian figures, which were released at the same time as weaker-than-expected U.S. jobs data.

The U.S. data increased speculation the U.S. Federal Reserve is now more likely to pump additional money into its sluggish economy. Many analysts think Canada’s central bank will be more reluctant to tighten monetary policy while its U.S. counterpart is easing.


In the details of the Canadian report, August saw an estimated 46,700 new part-time positions and 12,500 fewer full-time jobs. In July, there was a loss of 51,600 part-time jobs and a gain of 21,300 full-time positions.

“I wouldn’t take it as a robust report. It’s almost like we just reversed what we saw in the prior month,” BMO Capital Markets deputy chief economist Doug Porter said.

March and April saw a whopping 140,500 new jobs in total, but the trend settled in May and June to a more sustainable pace of more than 7,000 new jobs each month before July’s surprise loss.

The six-month average increase is more than 26,000, while the three-month average is a low 3,700.

Analysts said they had not seen sudden economic bursts or slowdowns that would explain the recent fluctuations. Indeed, the figures are only estimates based on a sample survey, with a one-in-three chance that the actual employment total is 28,600 higher or lower than the Statscan estimate.

Canada has recouped all the jobs lost in the recession, and employment stands 176,600 higher than in August 2011, with almost all the increase in full-time positions.


Both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty said they were encouraged by the job numbers but cautioned that all was not rosy.

“Our job performance as a whole since the recession has been very strong,” Carney told a Calgary news conference on Friday.

“The vast majority of those jobs have been private-sector, they’ve been full-time jobs. There’s still slack in the labor market, and that influences the conduct of monetary policy. It’s one of the reasons why policy is so accommodative,” he said.

Finance Minister Flaherty said: “There are challenges emanating from outside our borders, whether in Europe or the United States, to which Canada is not immune.”

The construction industry, which may be cooling off after a housing boom, lost 44,000 positions in August and now has 30,400 fewer jobs than a year earlier. All figures are seasonally adjusted.

Employment growth in the United States was weaker than expected, with nonfarm payrolls rising 96,000 in August, but the unemployment rate dropped to 8.1 percent from 8.3 percent as more people left the workforce.

The Canadian dollar touched its strongest level in nearly a year after North American jobs data. It firmed to C$0.9766 against the greenback, or C$1.0240, its strongest level since September 19, 2011.

Canadian bond prices were also stronger. The yield on the benchmark two-year bond, which is especially sensitive to Bank of Canada rate change expectations, fell to 1.15 percent from 1.19 percent just before the reports.

Additional reporting by Scott Haggett in Calgary; Editing by Peter Galloway and Jeffrey Hodgson

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