OTTAWA (Reuters) - Canadian employers hired five times more workers than expected in November in a stunningly upbeat jobs report that fueled expectations of a pickup in economic growth after a disappointing start to the recovery.
Statistics Canada said on Friday the economy added 79,000 jobs in the month, soaring past expectations of a 15,000 gain.
The unemployment rate edged lower to 8.5 percent from 8.6 percent in October.
“It’s all good. Obviously the headline was a shocker. Some of it came in the part-time and it was a bit of a bounce from the previous month. But most of the details were supportive,” said Mark Chandler, head of fixed-income and currency strategy at RBC Capital Markets.
The Canadian dollar rose immediately after the report to C$1.0458 to the U.S. dollar from around C$1.0530 just before the data was released.
A separate report on Friday showed an expansion of private-sector purchasing activity in November. The Ivey Purchasing Managers Index fell to 55.9 from 61.2 in October but was still above 50, which is a positive reading.
The surprising data more than offset job losses of 43,200 in October, which followed two months of gains. The moving average over six months, which gives a more accurate picture and strips out monthly volatility, shows average monthly employment growth of about 7,000, analysts said.
Canada has lost 321,000 jobs since employment peaked in October 2008, Statscan said.
The good November numbers add weight to forecasts of more robust economic growth in Canada in the fourth quarter after a tepid 0.4 percent annualized growth rate in the third quarter, the first rise after a recession lasting three quarters.
Still, the Bank of Canada is likely to hold its benchmark interest rate at a record low of 0.25 percent at its next policy announcement date on December 8. It is also expected to stick to its pledge to keep rates at that level until at least the end of June, conditional on inflation staying on track.
Governor Mark Carney acknowledged in a speech last month that the bank had overshot with its projection of 2 percent third-quarter growth, but he said its expectation of stronger growth in the fourth quarter and into 2010 remained valid.
“I think it’s in line because the Bank of Canada has been slightly more bullish on the economy than some of the indicators we have been getting have led us to believe, so I think it’s essentially in line with the overall view of the Bank of Canada because it does improve the economic outlook somewhat,” said Camilla Sutton, currency strategist at Scotia Capital.
Full-time employment increased by 39,000 and some 40,000 jobs were added to part-time payrolls.
The job market was strongest in the services sector, with the largest growth in education. Employment in goods-producing industries changed little but manufacturing, hard-hit by the strong Canadian dollar and the global recession, added 12,000 jobs.
Compared with a year earlier, average hourly wages of permanent employees rose 2.1 percent.
The U.S. jobs report for November on Friday also yielded a positive surprise, boosting recovery hopes. The economy shed only 11,000 jobs in November, well below the 130,000 loss markets had braced for.
Even so, Canada’s job market compares favorably considering the population is only one-tenth or one-twelfth the size of the American one.
“In both countries we have seen an upward trend. We expect that to continue, but it is really the pace of improvement that differs between Canada and the U.S.,” said Anna Piretti, senior economist at BNP Paribas in New York.
Additional reporting by Scott Anderson, Jennifer Kwan and Euan Rocha in Toronto; editing by Peter Galloway