OTTAWA (Reuters) - Canada added 11,900 jobs in September and the unemployment rate dropped to an almost five-year low of 6.9 percent, largely because fewer youths were looking for work, Statistics Canada said on Friday.
While September’s report shows Canada had largely regained jobs lost during the 2008-09 recession, there are few signs resurgent growth will appear soon enough to prompt a near-term interest rate hike by the Bank of Canada.
Doug Porter, chief economist at BMO Capital Markets, said the report was respectable.
“Definitely the eye-popping statistic here was the fact that the jobless rate has dropped below 7 percent, gripping the 6 percent handle for the first time in almost five years. That’s always an encouraging sign,” he said.
The gain was greater than the 10,000 new jobs predicted by market analysts. The jobless rate, which stood at 7.1 percent in August, touched the lowest since the 6.8 percent recorded in December 2008.
“Today’s job numbers show that Canada’s economy is on the right track,” Finance Minister Jim Flaherty said in a statement. “That being said, the global economy is still fragile, but there are still too many Canadians out of work.”
Average monthly job growth over six months, seen as a more reliable gauge of the jobs trend, was 23,100, up sharply from 12,300 in the prior six-month period. March’s heavy job losses of 54,500 are no longer a part of the most recent six months.
The jobs report suggests plenty of slack remains in the economy, meaning the Bank of Canada can be expected to keep its key rate at a near record low of 1 percent, where it has been since September 2010.
“Given indications that the bank is probably lowering its outlook for growth over the second half of the year it’s not the kind of environment where it sounds like the bank will contemplate any near-term move on rates,” said Paul Ferley, assistant chief economist at the Royal Bank of Canada.
Canada’s jobless rate has yet to fall to pre-crisis levels. During most of 2008 the unemployment rate sat between 5.9 percent and 6.1 percent.
Markets were more focused than usual on the Canadian data since the U.S. government did not release employment report for September, due to a partial government shutdown.
The Canadian dollar firmed to C$1.0376 versus the U.S. dollar, or 96.38 U.S. cents, after the data. This was stronger than just prior to the data’s release and stronger than Thursday’s North American finish at C$1.0396, or 96.19 U.S. cents. <CAD/>
Statscan said the main reason for the lower unemployment rate was the drop in the number of young people seeking work.
The overall participation rate, which includes those working or actively looking for work, slipped to 66.4 percent, the lowest since the 66.3 percent recorded in February 2002.
“One of the reasons young workers may be discouraged is that, since the recession, Canadian employers have added barely enough jobs to keep pace with population growth,” Erin Weir, an economist with the United Steelworkers union, said in a statement.
In September, Canada added 23,400 full-time jobs and lost 11,500 part-time jobs. Since September 2012, the economy has added 212,400 positions, an increase of 1.2 percent.
Employment in the hard-hit manufacturing sector dropped by 26,000 jobs in September. Finance, insurance, real estate and leasing added 33,200 jobs.
Wage growth for permanent employees, closely watched by the central bank, was 1.8 percent in September compared with a year earlier, up from 1.5 percent in August.
Additional reporting by Solarina Ho, Andrea Hopkins, Allison Martell and Euan Rocha in Toronto; Editing by Theodore d'Afflisio; Jeffrey Hodgson and David Gregorio