OTTAWA (Reuters) - The Canadian economy added 10,700 jobs in November and the jobless rate fell to 6.8 percent, but the strength was undermined by signs of deterioration in job quality and in Canada’s long-suffering resource sector.
The rise in employment bucked analysts’ forecasts for a loss of 20,000 jobs after two months of growth and reinforced expectations that the Bank of Canada will keep interest rates unchanged next week and for all of 2017.
Canada’s economic recovery has been hampered by a two-year slump in the price of oil, low business investment and disappointing nonenergy exports. Analysts said even the slow improvement in the job market belies underlying weakness.
Statistics Canada said on Friday that for the second month in a row, all the gains were in part-time positions, and noted the jobless rate fell because fewer people were seeking work.
“Certainly what it is telling us is that over the past year, the quality of job gains has not been great,” said Doug Porter, chief economist at BMO Capital Markets.
Some 8,700 full-time jobs were lost in November while 19,400 part-time positions were added.
In the last year, part-time work has risen 6.4 percent, while full-time employment has dropped 0.2 percent, according to Sherry Cooper, chief economist at the Dominion Lending Centres.
Bank of Canada Governor Stephen Poloz has said official data is not capturing labor market slack. The central bank, which meets on Dec. 7, is expected maintain its wait-and-see stance for more than a year, according to a Reuters poll released on Thursday.
The goods-producing sector shed 20,600 jobs on weakness in construction, while the service sector jobs rose 31,200.
“The industry mix of employment is at best neutral for Canadian wage growth ... we are still far from seeing price pressures in Canada that would push the Bank of Canada to want to tighten,” said William Adams, senior international economist at PNC Financial Services Group.
Unemployment in Alberta, the heartland of Canada’s energy industry, rose to 9.0 percent, the highest jobless rate since July 1994, according to Porter.
The data helped push the Canadian dollar to a six-week high of C$1.3254, or 75.45 U.S. cents, but the loonie gave up much of those gains by midday.
Separately, Statscan said labor productivity in the third quarter of 2016 jumped by 1.2 percent as the economy bounced back after the damage caused by a major wildfire in Alberta in May.
With additional reporting by Matt Scuffham, Solarina Ho and Fergal Smith in Toronto and Andrea Hopkins in Ottawa; Editing by Jeffrey Benkoe