Canada’s economy lost the most jobs since the 2009 recession during October, led by declines in the manufacturing and construction industries, cementing projections that the recovery is slowing.
Employment fell by 54,000 after an increase of 60,900 jobs in September, Statistics Canada said today in Ottawa, in the biggest monthly decline since February 2009. The unemployment rate rose to 7.3 percent from 7.1 percent. Economists surveyed by Bloomberg News had forecast an increase of 15,000 jobs and a 7.1 percent jobless rate in October.
“The headline was bad, and the underlying numbers don’t look great either,” said Rudy Narvas, senior economist at Societe Generale in New York, by phone. “It’s not pretty.”
The world’s 10th-largest economy shrank in the second quarter, two years after its last recession. Finance Minister Jim Flaherty told lawmakers Nov. 1 the global economic recovery remains fragile, and that too many Canadians remain unemployed.
The Canadian dollar weakened following the report. It traded at C$1.0190 per U.S. dollar at 11:38 a.m. in Toronto, a decline of 1.2 percent from C$1.0067 yesterday.
Canadian bonds rose, with the yield on the benchmark two-year bond falling nine basis points to 0.91 percent. The three-month overnight index swap rate, which measures what investors think the Bank of Canada’s main lending rate will average over that period, fell to 0.9565 from 0.97 yesterday. The Bank of Canada’s policy rate is 1 percent.
The U.S. added 80,000 jobs in October, pushing down the jobless rate to a six-month low of 9 percent from 9.1 percent, the Labor Department reported today. Economists had been expecting an increase of 95,000 jobs, according to a Bloomberg survey.
The monthly decline in Canada was led by the loss of 48,400 jobs in the manufacturing sector and 20,100 jobs in construction. Natural resources posted the biggest gain, adding 12,100 jobs.
“Essentially, we have created no net new jobs in the past three months,” said Sal Guatieri, senior economist at Bank of Montreal’s Capital Markets unit, referring to Canada. Between August and October, the economy added only 1,400 jobs, according to Statistics Canada figures.
The October report confirms Guatieri’s view that the Canadian economy will slow in the fourth quarter, after rebounding solidly in the third quarter. “It generally supports our view that Canada’s economy will grow quite modestly in coming quarters,” he said in a phone interview from Toronto.
“We’re disappointed with the numbers and concerned about them,” Prime Minister Stephen Harper said from Cannes, France, where he was attending a meeting of leaders from the Group of 20 countries. “It’s been very volatile, and slower than we would like. And it’s a reflection of the lack of confidence that has been spreading in world markets as a consequence of the European debt crisis.”
Full-time employment dropped by 71,700 in October, while part-time jobs increased by 17,700. Self-employed workers declined by 18,100, while workers classified as employees fell by 35,900.
Employment in the private sector slid by 32,000, while public-sector jobs dropped by 3,800.
Narvas, who had predicted a decline of 18,900 jobs for the month, said he wasn’t expecting such a significant decline in private-sector jobs.
The Bank of Canada held its main interest rate at 1 percent on Oct. 25, saying the outlook for the Canadian economy had weakened since July. The central bank also cut its forecasts for Canada’s economic growth through the middle of 2012, based on its outlook for a brief European recession and slow U.S. growth.
‘Much Weaker’ Quarter
“Suddenly, the jobs market doesn’t look quite so rosy in Canada,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce in Toronto, said in a note to clients. The monthly decline suggests economic growth could be “much weaker” in the fourth quarter than in the third, he said.
Canada’s jobless rate has been below the U.S. since October 2008. The Labor Department in Washington reported payrolls climbed by 103,000 workers in September, and will report October figures at 8:30 a.m.
Canadian average hourly wages rose 1.5 percent in October from a year earlier, the report said, unchanged since September. Wage growth for full-time employees slowed to 1.4 percent in the month from 1.6 percent the prior month.