September 9, 2011 / 11:24 AM / 6 years ago

Canada reports August job losses

OTTAWA (Reuters) - Canada’s economy surprised markets by reporting net job losses in August, overshadowing other signs the economy was making a comeback after a bleak second quarter, and keeping central bank rate hikes off the table.

The unemployment rate rose in the month to 7.3 percent from 7.2 percent, Statistics Canada said on Friday.

Net job losses totaled 5,500, far worse than the median market forecast of a gain of 25,000 and matching only the most bearish estimate in a Reuters survey of 23 analysts.

Canada’s job market has appeared healthier than in the United States since the recession, but the latest numbers are more in line with sobering U.S. employment reports that prompted U.S. President Barack Obama to propose a $447 billion jobs package on Thursday to jump-start the sagging economy.

“Disappointing,” said Sal Guatieri, senior economist at BMO Capital Markets.

“We are seeing the lagged effect of the economy contracting slightly in the second-quarter on labor markets now,” he said.

The Canadian dollar dropped to C$0.9551 against the U.S. dollar, or $1.0049, compared to C$0.9927, or $1.0074, heading into the release.

However, some of the details from Canada were less grim, with 25,700 full-time jobs created versus a loss of 31,200 part-time positions. Hiring was strong in the public sector and in services industries.

The economy has generated 223,000 net jobs in the past year, or a 1.3 percent increase. As of April this year, it had recovered all the full-time jobs lost during the recession.

“In terms of bank policy we really don’t think that this adds much to the mix,” said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets.

“To be fair, most of the impetus both for interest rates and currency is likely to be driven by overall risk appetite and what’s happening abroad,”


Along with the worsening global economic outlook, the report gives the Bank of Canada another reason to back away from its intentions, signaled in July, to hike interest rates this year.

The bank held its key rate unchanged on Wednesday at 1 percent and analysts surveyed by Reuters immediately after the rate statement expected the next move to be up, but not until mid to late 2012.

But overnight index swaps, which trade based on expectations for the policy rate, have been pricing in a cut. Following the jobs report, the OIS yields showed investors slightly increased their bets of a rate cut later this year.

The construction sector saw the biggest layoffs in August, according to Statscan, followed by transportation and natural resources. The biggest gains were in health care and social assistance, while employment was unchanged in manufacturing.

The average hourly wage of permanent employees, closely watched by the Bank of Canada for signs of inflationary pressure, rose 1.5 percent in August from a year earlier, compared with 1.2 percent in July.

Reporting by Louise Egan and Howaida Sorour; editing by Jeffrey Benkoe and W Simon

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