OTTAWA (Reuters) - Canada’s economy lost more jobs than expected in February as the global downturn triggered widespread layoffs, another sign the country’s recession may be more severe than many previously thought.
Statistics Canada said net job losses totaled 82,600 in the month, compared with forecasts for a decline of 52,500. It was the fourth straight month of declines.
The jobless rate climbed to 7.7 percent, the highest since a rate of 7.9 percent in September 2003 and above the market forecast of 7.4 percent.
“A U.S. style pace of labor market deterioration has landed on Canada’s doorstep,” said Derek Holt, economist at Scotia Capital.
Doug Porter, deputy chief economist at BMO Capital Markets, said: “Between all the job losses concentrated on full-time positions and the unemployment rate bouncing up more than expected it was clearly a very weak report from head to toe.”
The Canadian dollar weakened after the report to C$1.2825 to the U.S. dollar, or 77.97 U.S. cents, from C$1.2786 to the U.S. dollar, or 78.21 U.S. cents just before the numbers.
The bleak data added to the news last month that job losses in January were the steepest on record at 129,000, sending shock waves through the country and nudging politicians to advance a fiscal stimulus package through Parliament.
Economists have been scrambling lately to mark down their forecasts for the economy this year and this data suggests the Bank of Canada may do the same in its next chance to do so in April.
“They (Bank of Canada) might go more bearish near term,” said Holt. “They’ve thrown off plenty of signals that they’re committed to doing what it takes to get to their growth number next year.”
The central bank, which has slashed its key interest rate to a historic low of 0.5 percent, said in January that it expects the economy to start growing again in the third quarter. Its forecast of 3.8 percent growth in 2010 is seen as too upbeat by most private sector economists.
In the past four months, Canada has lost 295,000 jobs as the global financial crisis battered the export-reliant economy and triggered cutbacks at companies like Nortel and Tembec.
The weakness pulled down employment in most sectors in February, with construction being the hardest hit with 43,000 people taken off payrolls. The U.S. recession has meant particularly severe cutbacks in Canadian forestry and auto industries.
Only manufacturing and agriculture posted gains in February although over 100,000 factory jobs have been lost in the past year.
Ontario, the industrial heartland of Canada and the largest provincial economy, has been the most exposed to the global economic crisis and saw its jobless rate leap to 8.7 percent.
Wage increases slowed in February from a year earlier to 3.9 percent from 4.7 percent in January, based on the hourly salaries of permanent employees.
Additional reporting by Scott Anderson and Jennifer Kwan in Toronto, Editing by Chizu Nomiyama