Canadian employers unexpectedly cut positions in September, and the unemployment rate fell as people left the workforce.
Employment fell by 6,600 jobs, the second drop in the past nine months, following a gain of 35,800 in August, Statistics Canada said today in Ottawa. The jobless rate declined to 8 percent from 8.1 percent as 24,400 people stopped looking for work. Economists forecast job growth of 10,000 and an unemployment rate of 8.1 percent, according to the median estimates of 17 economists in Bloomberg surveys.
The slowing labor market may give the Bank of Canada more scope to keep interest rates unchanged at its next policy announcement on Oct. 19. The central bank raised its benchmark interest rate to 1 percent last month and said it expected a more gradual recovery in economic growth. Employment gains averaged 6,600 over the past three months, down from the 75,530 average in the previous quarter.
“The headline was weaker than expected, but there were some bright spots -- it wasn’t all gloom and doom,” said Rudy Narvas, a senior economist with Societe Generale SA in New York, pointing to an increase in full-time jobs. “As a whole, the report is a wash for the Bank of Canada -- it doesn’t really push the central bank to increase rates.”
Narvas said he expects the central bank to stand pat at the next decision.
Canada’s dollar, which initially weakened after the Canadian report, recouped losses following the U.S. employment release. The currency strengthened 0.1 percent to C$1.0167 per U.S. dollar at 8:35 a.m. in Toronto, compared with C$1.0174 yesterday. One Canadian dollar buys 98.36 U.S. cents.
Finance Minister Jim Flaherty said last week in St. Catharines, Ontario he expects “modest” third quarter economic growth and that the unemployment rate is still too high.
Full-time employment rose by 37,100 positions in September, which was more than offset by a drop of 43,700 part-time jobs.
“Conversion of part-time to full-time jobs is a mild positive buried beneath the headline as it expands hours worked, and full-time jobs are generally better paying and more stable,” Derek Holt, vice-president of economics at Bank of Nova Scotia’s capital markets unit in Toronto, said in a note to clients. “On balance, the details to this report are more encouraging than the mild headline drop.”
Payroll employment advanced by 11,800 positions in September, and self-employment fell by 18,400, the agency said. Governments hired 6,500 workers and private firms added 5,300 jobs. Canada’s economy has created 349,000 jobs since September 2009, the report said, an increase of 2.1 percent.
Employment in the professional, scientific and technical services category fell by 31,900 positions, while educational services declined by 9,800 positions after rising by 68,400 positions in August.
Transportation and warehousing companies created 15,000 jobs in September, Statistics Canada said. Manufacturing companies added 8,200 jobs in September.
Best Buy Co., the world’s largest consumer-electronics retailer, said this week its 146 Future Shop stores will hire 4,000 people across Canada for the holiday shopping season to supplement its current 10,000 employees.
The International Monetary Fund predicted this week that Canada’s unemployment rate will fall to 7.5 percent next year, compared with the 6.2 percent rate seen before the recession in September 2008.
Average hourly wages rose 2.3 percent in September from a year earlier, Statistics Canada said in the report, the same pace as in August.
The U.S. also lost more jobs than forecast in September, as employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop and the unemployment rate unexpectedly held at 9.6 percent.