September 10, 2010 / 11:17 AM / 7 years ago

Canada adds more jobs in August

OTTAWA (Reuters) - Canada’s economy added more jobs than expected in August, but the pace of employment creation slowed from the first half of the year, suggesting the recovery was losing momentum, and market reaction to the numbers was unenthusiastic.

<p>Shadows are seen as a man walks down Bay Street in the financial district in Toronto in this March 11, 2009 file photo. REUTERS/Mark Blinch</p>

Statistics Canada said on Friday employment rose by 35,800 jobs last month, but the unemployment rate edged up to 8.1 percent from 8.0 percent in July as more people entered the labor force.

The Canadian dollar jumped to a three-week high against the U.S. dollar right after the data was released, but it turned lower as the market digested the details of the report.

From a high of C$1.0287 to the U.S. dollar, or 97.21 U.S. cents, touched immediately after the publication of the report, the currency slipped as low as C$1.0352 to the U.S. dollar, or 96.60 U.S. cents.

Market operators had forecast an unchanged jobless rate and a gain of 30,000 jobs in August after a surprise drop of 9,300 jobs in July -- the first decline of the year.

“With the August employment rise, all of the recession’s job losses have now been recouped. Put another way, there are now more Canadians employed than ever before,” said Doug Porter, deputy chief economist at BMO Capital Markets.

Still the details were soft, he added.

“Distortions in both education and manufacturing make this a cloudier jobs report than usual. However, sifting through the many cross-currents, the underlying story is on the soft side and consistent with a broader loss of economic momentum.”

With two months of third-quarter jobs data now out, the figures signal a less robust pace of job creation than in the first half of the year, Statscan said in its daily bulletin.

“Monthly gains in employment averaged 13,000 in July and August, compared with an average monthly increase of 51,000 during the first six months of the year,” Statscan said.

Analysts said the data would not overly concern the Bank of Canada, which raised interest rates on Wednesday while conceding that the economic recovery was progressing more slowly than it had predicted less than two months ago.

“I think (the Bank of Canada) will probably see it the same way that we are, in the way that this is still consistent with an economy that is slowing a little bit,” said David Tulk, senior macro strategist at TD Securities.

Market pricing for the Bank of Canada will do on its October 19 interest rate decision date was little changed following the report, as measured by a Reuters calculation of yields on overnight index swaps. These swaps suggested a 61 percent likelihood of no change in interest rates next month, compared with about 66 percent late on Thursday and about in line with what most primary dealers predicted in a Reuters poll this week.

EDUCATION MUDDLES REPORT AGAIN

Full-time jobs increased by 79,900 while part-time positions dipped by 44,100 in August. Only six of 14 industrial sectors posted job gains.

The manufacturing sector, hit hard over the last two years by a strong Canadian dollar and weak U.S. demand, lost 25,600 jobs.

But the educational sector added 68,000 jobs in August after a reported loss of 65,300 positions in July -- a figure that analysts at the time described as both “mythical” and likely a Statistics Canada’s struggle with seasonal adjustments in the category.

Scotia Capital said relying upon the headline figure on Friday was unwise because of the “record distortions” in the education sector.

Stripping out the volatile education component, analysts estimated monthly employment actually fell by about 32,000 in August.

Another troubling spot was the lack of hiring in the private sector, which lost nearly 40,000 jobs in the month. The government had counted on the private sector to carry the next leg of Canada’s economic recovery as government stimulus spending fades, but August showed a second straight monthly decline.

Finance Minister Jim Flaherty said on Thursday that the private sector must “step up” and keep reinvesting profits.

The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressures, rose 2.3 percent in August from a year earlier. The equivalent figure for July was 2.6 percent.

Additional reporting by Ka Yan Ng, Claire Sibonney, and Euan Rocha in Toronto, Editing by Chizu Nomiyama and Peter Galloway

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below