September 6, 2013 / 12:39 PM / 5 years ago

Canada jobs bounce back in August, trend still weaker

OTTAWA (Reuters) - Canada’s economy churned out a surprising 59,200 jobs in August, nearly triple the number expected, but most of the gains were in part-time work and the six-month trend in the labor market remains modest.

A construction worker works on the "ICE Condominiums" development site by Cadillac Fairview and Lanterra Developments in Toronto December 14, 2012. REUTERS/Mark Blinch

The jobs report, released by Statistics Canada on Friday, suggests modest economic growth continuing through the third quarter and gives the Bank of Canada no reason to alter its policy of standing pat on interest rates for now.

The unemployment rate edged down to 7.1 percent from 7.2 percent, with most of the hiring done in the services sectors, led by health care and social assistance. However, there was no real evidence of a sustained comeback in the hard-hit manufacturing sector, which could indicate a long-overdue export recovery.

Economists surveyed by Reuters had forecast 20,000 net new jobs in August and no change in the jobless rate.

The outstanding performance, the equivalent of about 533,000 jobs in the United States, comes amid volatile employment data in 2013 so far, peaking at 95,000 new jobs in May after a loss of 54,500 in March.

The average monthly job growth over six months, seen as a more reliable gage of the trend in the job market, was 12,000 compared with 29,000 in the previous six-month period and 26,000 in 2012.

“I think this is just another wild ride on the Canadian job market roller coaster,” said Doug Porter, chief economist at BMO Capital Markets.

“I’m not sure it is terribly meaningful, but at the very least it does brush aside the softness we saw in July and shows there’s still solid underlying momentum in the Canadian labor market,” he said.

Some details of the August report suggested underlying weakness. About 70 percent of the jobs were part-time, most were in the services industries, which tend to be lower-paying. Most of the new hires were aged 55 or older, mainly women, while employment was little changed for younger age groups.

On a more positive note, the private sector added more workers than the public sector.

Canada’s economy has recovered the jobs lost during the 2008-09 recession but the jobless rate has yet to fall to pre-crisis levels. Finance Minister Jim Flaherty on Thursday said the government’s focus now was on training job seekers who don’t have the skills needed to fill the jobs available.

U.S. job growth, by contrast, missed forecasts in August with 169,000 added to payrolls, yet workers giving up the search for work meant the unemployment rate dropped to a 4-1/2 year low.

The Canadian dollar strengthened to its firmest level in 2-1/2 weeks after the data was released to C$1.0387 versus the U.S. dollar, or 96.27 U.S. cents.

Paul Ferley, assistant chief economist at Royal Bank of Canada, sees no impact on monetary policy from the Canadian data. The central bank has held rates steady at 1.0 percent for three years and is not expected to raise rates until the fourth quarter of 2014.

“The issue they’re dealing with right now is getting a sense after the modest gain in GDP (gross domestic product) growth in the second quarter how much of a rebound we’re likely to get in the third quarter,” he said.

Wage growth for permanent employees, closely watched by the central bank, was 1.5 percent in August compared with a year earlier, up from 1.3 percent in July.

In August, services industries added 40,600 workers while goods-producing industries added just 18,600.

Employment in health care and social assistance led the gains, surging by 59,500 in August in what Statscan said was a long-term upward trend. That was offset by a loss of jobs in education, finance and “other services”.

The construction industry added 17,700 workers in a possible reflection of renewed strength in the housing sector. Some 5,700 manufacturing jobs were generated in the month, but the sector still had 3,000 fewer jobs than a year ago.

Additional reporting by Alex Paterson, Alastair Sharp, Andrea Hopkins and Leah Schnurr; Editing by Theodore d'Afflisio

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