22,000 jobs created in December as manufacturing surges

Canada has more than recouped all the jobs lost during the 2009 recession
By Louise Egan
|hrreporter.com|Last Updated: 02/01/2011

(Reuters) — Canada's economy created more jobs than expected in December after three months of disappointing employment numbers, coinciding with signs of momentum in hiring in the United States.

Some 22,000 more Canadians were working in December than in November primarily because of a surge in manufacturing jobs. The unemployment rate held steady at 7.6 per cent, according to Statistics Canada's labour force survey released on Friday.

Markets expected 17,500 positions to be created in the month and the jobless rate to tick higher to 7.7 per cent.

The jobs data are probably not strong enough to persuade the Bank of Canada to hike interest rates this month, as there are still signs that the economic recovery has lost some of its shine. But it could mean its next hike will come sooner than previously expected.

"In terms of the Bank of Canada, I think they'll take some comfort from Canadian labour markets continuing to generate jobs," said Paul Ferley, assistant chief economist at Royal Bank of Canada.

"But I think it's probably not strong enough to alter policy. They'll likely remain on the sidelines, trying to assure the strength is not only sustained but strengthens further going forward," he said.

The central bank hiked its target lending rate three times last year to one per cent but has been on pause since September.

Underlying strength

Some of the report's details suggested underlying strength in the economy, with the private sector accounting for the vast majority of jobs filled in the month and the number of full-time positions eclipsing part-time ones.

The data followed weaker-than-expected job growth in November and October and net job losses in September.

Statscan said the economy has added 369,000 jobs during all of 2010, an employment increase of 2.2 per cent and comparable to pre-crisis growth of 2.1 per cent in 2007. Canada has more than recouped all the jobs lost during the 2009 recession.

The job recovery in Canada was much faster than in the United States and the jobless rate has been considerably lower, an historical anomaly. Still, the pace of growth has slowed considerably in recent months while recent U.S. employment data suggests it may soon start catching up.

In Canada, the manufacturing sector led hiring in December, more than offsetting jobs lost in the previous month. Doug Porter, deputy chief economist at BMO Capital Markets called the manufacturing data "a real bright spot."

Eric Lascelles, chief macro strategist at TD Securities, agreed.

"Really the mysterious man of the hour is manufacturing which gained 66,000 jobs ... In fact, it's such a big monthly gain that you end up closing out 2010 with more manufacturing jobs than the start of the year which is not something I think anyone really seriously predicted over the last year," he said.

The transportation and warehousing and natural resources industries also recorded gains, while the construction industry had its first notable employment decline since July 2009.

The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressure, sped up slightly to 2.3 per cent in December from a year earlier and from 2.2 per cent in November.

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