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Canadian Employment at 4 year High

By Lisa Harris October 7, 2016
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Canadian employment figures have edged up to a 4 year high in its September release, indicating that a reduction in interest rates may not be necessary to keep the slow recovery from the commodities bust. Statistics Canada stated on Friday in Ottawa that Canadian employment rose by 67,200, the most since April 2012. An economist survey carried out by Bloomberg that had a median prediction of 7,500 new positions also revealed that the increase was triple the highest estimate. The Canadian labor market remains fairly stable despite the recent cost cutting measures being employed by oil and gas companies to deal with lower commodity prices. The durability of job gains remains to be seen, however. Bank of Canada Senior Deputy Governor Carolyn Wilkins said in a speech Thursday there is more slack in the labor market than the unemployment rate would suggest.

“Overall, a very strong number, but we doubt it will be the start of a new trend,” Charles St-Arnaud, an economist in London at Nomura International Plc, said in a note.

The Canadian dollar erased declines after the report, trading little changed at C$1.3221 versus the U.S. dollar at 8:49 a.m. Toronto time. It had been down 0.6 percent in the moments before the report was released. Bond yields rose. “The job gains weren’t enough to nudge down Canada’s 7% unemployment rate, as the labor force grew by 69,000 people”, Statistics Canada said.

"Behind Canada's great headline increase in employment, the details for September were still soft," said William Adams, senior international economist at PNC Financial Services Group. Still, Adams said, given September's employment growth, recent economic improvement and the gain in oil prices, the Bank of Canada is likely to hold rates through the end of 2017.

Overall, the private sector created 17,000 positions with new jobs in business, finance and technical services. The transportation, manufacturing and construction industries also added positions. Job losses in health care and social assistance underpinned a small dip in public-sector employment.

“A positive report for the Canadian economy, and one that continues to show modest national growth,” Bank of Montreal senior economist Robert Kavcic said in a note. Among the provinces, Quebec created more jobs for the second consecutive month. Alberta, which has suffered from the drop in oil prices, added 13,000 positions. But the province’s labor force has shrunk over the year and the jobless rate inched up to 8.5%. Analysts in a Bloomberg survey expected Canada to create 7,500 jobs and the jobless rate to stay at 7%.

The Canadian dollar strengthened against the greenback following the report. Traders were also absorbing the U.S. jobs report, which showed employment growth there unexpectedly slowed for the third straight month. Much of Canada's increase in self-employed positions was in the health care and social assistance sector, according to the statistics agency. But that was offset by a decrease in public sector jobs within the industry, leaving it down a net 14,300 jobs.

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By Lisa Harris October 7, 2016

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