Canadian unemployment rate slips to 7.6 percent

AP News
Posted: May 06, 2011 11:05 AM
Canadian unemployment rate slips to 7.6 percent

Canada's economy created 58,300 jobs last month, bringing the unemployment rate down to 7.6 percent, matching the lowest jobless level since the early months of the recession, a reporting agency said Friday.

Statistics Canada said most of the gains were in the service sector, and almost all of them were in Ontario.

Although the jobs increase was dominated by part-timers, there were 17,200 new full-time jobs created in April.

April's gains bring the year-over-year increase in employment to 283,000, enabling the recovery of all the full-time jobs that were lost in the 2008-2009 recession.

The encouraging signals stopped the recent slide in the Canadian dollar, which rose by almost one US cent in early morning trading to 104.25 US cents, largely reversing Thursday's 1.05 US cent dip.

Economists had expected a more modest 20,000-job pickup following a weak March.

"This is a pretty encouraging report," said Douglas Porter of BMO Capital Markets. "There was a sense we could be hit by a negative jobs report, but what we see this morning is that the recovery continues to roll forward."

Using a three-month average, jobs have risen at an average of 24,000 job gains a month and full-time employment by 28,000 a month, a strong forward momentum, Porter pointed out.

The U.S. jobs situation, while still lagging behind Canada, also put in a strong month, adding 244,000 new workers.

Normally, a strong employment report would put pressure on the Bank of Canada to raise interest rates as a precaution against inflation.

Scotiabank economist Derek Holt said he predicts bank governor Mark Carney will likely take solace that the froth appears to be coming come off commodity prices, particularly oil, which this week fell below $100 a barrel.

"The correction in commodities, if it sticks, would ease up on the inflation concerns across a number of global central banks," Holt said. "As well, wage growth actually decelerated a bit in the past month to 2.4 percent year-over-year using the Bank of Canada's preferred permanent employees measure. That can constrain inflation concerns more than any upside surprise in jobs in terms of spooking the bank"

Holt still believes Carney won't hike the trendsetting interest rate from the current one percent until October.