Canada's unemployment rate rises, 43.2K jobs lost

AP News
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Posted: Nov 06, 2009 1:00 PM

Canada's unemployment rate rose to 8.6 percent in October from 8.4 percent a month earlier as the economy shed a net total of 43,200 jobs, the government said Friday.

The decline in jobs follows two months of moderate growth. Economists had been expecting an increase of 10,000 jobs in October.

Statistics Canada said that the job decline reflects the loss of 60,000 part-time jobs. Full-time employment increased slightly.

The net job loss partly offset the net total of 58,000 jobs added over the past two months.

Avery Shenfeld, CIBC bank chief economist, said the reversal makes it more likely that Canada's central bank will keep interest rates at a record low until June 2010.

"It really cancels the upside surprise that we saw in the prior two months when employment seemed to be growing much faster than the economy's overall pace might have dictated," Shenfeld said.

Canada is still seeing weakness in the manufacturing and natural resource sectors that depend on growth in the U.S. The U.S. is Canada's largest trading partner.

Dawn Desjardins, assistant chief economist for RBC Economics, called the report disappointing after two months of unexpected job gains.

"It's a much softer report than we anticipated," Desjardins said.

Statistics Canada said that the job decline reflects the loss of 60,000 part-time jobs. Full-time employment increased slightly.

The agency said that employment is now down 400,000 jobs, or 2.3 percent, since a year ago.

Don Drummond, chief economist for TD Bank, said the numbers are far worse in the U.S where the unemployment rate has hit double digits for the first time since 1983.

The U.S. unemployment rate jumped to 10.2 percent in October as the economy shed a net total of 190,000 jobs, the U.S. Labor Department said Friday.

Canada has avoided bank bailouts and has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis in Canada where the financial sector is dominated by five large banks.

But the global financial crisis hurt Canada as more than 70 percent of Canada's exports to the U.S. Canada's auto and forestry sectors have been particularly hit hard.