OTTAWA (Reuters) - Canada unexpectedly added 35,900 jobs in April, but analysts who had expected the economy to extend its recent pattern of posting heavy job losses generally said the figures were most likely an aberration.
Market operators had on average predicted the economy would lose 50,000 jobs in April. The increase in the number of jobs was the largest since the 92,200 recorded in September 2008.
The Canadian dollar rallied on the news. Several bank economists expressed skepticism about the figures, however, with one saying it could be a “head fake” and another adding that he did not entirely trust the data.
Statistics Canada said on Friday that April’s increase was thanks largely to a rise in self-employment. The jobless rate remained steady at a seven-year high of 8.0 percent, reflecting a growth in the number of people looking for work.
“We believe it’s an aberration on a year-long trend in job losses that faces serious headwinds over coming months not only in autos and broader manufacturing, but also on low odds of a return in large-scale resource projects any time soon,” said Derek Holt and Karen Cordes of Scotia Capital Research.
Statistics Canada figures show employment had dropped by a total of 272,900 jobs in the first three months of the year.
“Although this report was a bit toasty, its interpretation is rather mixed and the Bank (of Canada) is unlikely to act on a single piece of information,” said Charmaine Buskas, an economics strategist at TD Securities.
The central bank has vowed to keep rates at historic lows until mid-2010 as long as inflation remains tame.
The Canadian dollar rallied on the data, rising from C$1.1620, or 86.06 U.S. cents just before its release, to as high as C$1.1577, or 86.38 U.S. cents. By 8:30 a.m. EDT it was trading at C$1.1607, or 86.15 U.S. cents.
Employment in the hard-hit manufacturing sector gained 6,700 jobs from March. The sector has lost 106,300 positions since April 2008.
“It’s basically good news across the board and stunningly good news,” said Doug Porter, deputy chief economist at BMO Capital Markets.
“I guess the only caution I would make is that it may well be a head fake just given the fact (of) how rapidly employment was declining in the first three months of this year. It could be just a temporary correction.”
The average hourly wages of permanent employees rose by 4.3 percent from April 2008, slightly more than the 4.1 percent year-on-year increase recorded in March.
“It’s a better than expected overall report on both the headline and the details, notwithstanding the fact that there are some significant distortions like the self-employed component that I don’t trust in the figures here,” said Scotia Capital’s Derek Holt.
“I don’t think one month’s report will sway anything in a policy sense. I think we’re still dealing with a downward trend in Canadian employment for all of this year.”
To view the Statistics Canada release, please go to: here
Additional reporting by Ka Yan Ng in Toronto; Editing by James Dalgleish