Canada Adds More Jobs Than Expected in April

Reuters

Canada's economy created far more jobs than expected in April and recovered all the full-time positions lost in the recession, setting the stage for solid second-quarter growth and interest rate hikes later this year.

Net job creation totaled 58,300 in the month, Statistics Canada said on Friday, exceeding the forecast in a Reuters poll of a 22,500 gain.

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While the overall number of jobs created was more than twice the amount expected, some details in the report were impressive . Most of the gains were in part-time positions and in the services sector where wages tend to be lower.

Total employment in Canada had recovered faster than in the United States and returned to pre-recession levels in January. As of April full-time employment also reached that benchmark for the first time.

The unemployment rate fell in April to 7.6 percent from 7.7 percent in March, but remained well above the pre-crisis level of 6.2 percent in September 2008.

The jobs data is reinforces market expectations the Bank of Canada will see no need to resume hiking interest rates until July at the earliest, following three increases in mid-2010 to 1.0 percent.Doug Porter, deputy chief economist at BMO Capital Markets, said the report was "respectable" but "not the overwhelming show of strength the whole whopping headline gain of 58,000 would suggest."

"I don't think this report is going to make a major impact on the Bank (of Canada)'s view of the world. At the margin, it may give them a little bit more comfort in raising rates this year," he said.The Canadian dollar jumped to a session high after the data, firming to C$0.9600 to the U.S. dollar, or $1.0417 U.S. after the data. It was also up from Thursday's North American finish at C$0.9682 to the U.S. dollar, or $1.0328.

Overnight index swaps, which trade based on expectations for the key central bank rate, showed investors slightly increasing bets on rate hikes throughout the rest of 2011 just after the news hit.Money market and short term bond yields rose after the data. The yield on the two-year Canadian government bond, which is especially sensitive to Bank of Canada rate moves, rose to 1.70 percent from 1.666 percent just before the report.

The services sector led the hiring, particularly the finance, insurance, real estate and leasing industry as well as business, building and support services. All other sectors showed little or no change in the month.

Overall, the services sector added 69,600 workers in April whike the goods-producing sector cut 11,300 from payrolls. The labor-intensive manufacturing and construction industries both showed net job losses.

The average hourly wage of permanent employees -- which is closely watched by the Bank of Canada for inflation pressures -- rose 2.4 percent from a year earlier, compared with 2.6 percent in March.

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