Economy grows by 69,200 but unemployment rose to 7.8 per cent
(Reuters) - Canada's economy created far more jobs than expected in January on strength in the service sector, confirming its recovery is on track and providing a further boost to its currency.
Statistics Canada data on Friday showed the economy added 69,200 new positions. The unemployment rate grew to 7.8 per cent from 7.6 per cent in December as more people entered the workforce, the central statistics agency said.
Market analysts had expected 15,000 new jobs and the jobless rate to stay unchanged.
"This is a strong report through and through," said David Tulk, chief Canada macro strategist at TD Securities in Toronto.
"You look at the composition of jobs that were very evenly split between full-time and part-time, public sector and private sector — all just very good numbers."
Canada has now added just under 100,000 jobs in the last two months. Finance Minister Jim Flaherty, citing weak U.S. hiring, this week said there was some resistance to the Canadian jobless rate sinking further.
The employment gain in January was evenly split between full- and part-time positions. The service sector added 49,400 jobs, with particular strength in business, building and other support services.
The Canadian dollar jumped on the news, hitting a session high at Cdn$0.9845 to the U.S. dollar, or $1.0157, up sharply from Cdn$0.9890 just before the data was published.
Money market rates and bond yields also rose on the report. But overnight index swaps, which trade based on expectations for the key central bank rate, showed investors see a 98.85 per cent probability rates will stay on hold at the Bank of Canada's next rate announcement on March 1. This compared with 99.08 per cent before the data.
The average hourly wage of permanent employees — which is closely watched by the Bank of Canada for inflation pressures — rose 2.3 per cent from January 2010, the same year-on-year rate as in December.
