Saturday, May 12, 2007

Canada Firms Unexpectedly Shed 5,200 Workers in April (Update3)

Canadian employers unexpectedly shed 5,200 jobs in April, the first drop in eight months, led by manufacturers and financial-services companies.

The jobless rate stayed at a three-decade low of 6.1 percent as people left the workforce, Statistics Canada said today in Ottawa. Economists predicted 19,000 new jobs for April and a 6.1 percent jobless rate, based on the median of 25 and 26 estimates in Bloomberg News survey.

The drop marks a pause in the longest succession of job gains since a 15-month streak during 2002-2003. Bank of Canada Governor David Dodge, who has kept the country's main lending rate at 4.25 percent for almost a year, said last month that domestic demand will be the economy's ``primary engine of growth'' this year.

``Our hunch was right that after six months of unsustainably strong job growth, we would see a bit of a payback,'' said Ted Carmichael, chief economist at J.P. Morgan Securities in Toronto. Carmichael made the closest forecast, predicting no change in employment, and said doesn't see a negative trend developing. ``I don't think it changes the picture that the economy is doing well,'' he said.

Previous job gains, including 54,900 in March and 88,900 in January, led Canadians with new paychecks to drive home prices to record highs and offset a narrowing international trade surplus.

The Canadian dollar was little changed at 4:10 p.m. in Toronto, from 90 cents late yesterday.

The yield on the banker's acceptance contract due in September fell 3 basis points to 4.41 percent on the Montreal Exchange today, suggesting fewer investors speculate the central bank will raise its benchmark rate by then.

Central Bank

J.P. Morgan's Carmichael said he expects the central bank to raise rates in September and that today's report didn't alter his views.

Companies shed 14,900 full-time workers and added 9,700 part-time jobs in April. No economist surveyed by Bloomberg News had predicted a decline in overall employment.

Workers aged 15 to 24 suffered most from the drop, with 10,100 losing their jobs. The unemployment rate for that group rose to 11.5 percent, from 11 percent in March.

Wage Growth

Average hourly wages rose 2.9 percent from a year earlier, faster than March's 2.2 percent pace, Statistics Canada said. Wage growth accelerated as companies hired 12,100 workers in the oil-rich western province of Alberta, where an energy boom has led to labor shortages.

Canada's core inflation rate, which excludes eight volatile items and some taxes, slowed to 2.3 percent in March from a year earlier, after reaching a four-year high of 2.4 percent in February, Statistics Canada said April 19. Overall inflation accelerated to 2.3 percent from 2 percent.

Quebec, the central Canadian province where many of the country's struggling manufacturers and lumber exporters are based, added 10,900 jobs, pushing its unemployment rate to a 33-year low of 7.2 percent.

Canada has added about 1.9 million jobs since 2001, in a country of 32.8 million people, as companies earn record profits from exports of commodities such as energy and metals. The job growth has stoked record homebuilding and consumer spending.

U.S. Jobs

Job growth in the U.S. fell to its lowest level in more than two years in April, as payroll losses spread from struggling homebuilders and factories to retailers. The month's 88,000 new jobs followed a gain of 177,000 in March that was smaller than first estimated, the Labor Department said May 4 in Washington. The U.S. jobless rate rose to 4.5 percent from 4.4 percent, which matched a five-year low, and wage growth slowed.

Canadian factories shed 18,600 workers in April and financial firms such as banks and insurers fired 17,200 employees, the statistics agency said.

Still, retailers and wholesalers added 20,100 jobs in April, while utilities hired 11,200 people and hospitals put 11,800 new workers on their payrolls.

The labor force shrank by 2,600 in April, pushing the participation rate down to 67.6 percent, from 67.7 percent in March.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at

No comments: