Canada’s Jobless Rate Rises to 3-Year High

Canadian employment fell by almost twice as much as expected in December, led by construction, more evidence that the world’s eighth-biggest economy is suffering from the effects of a global recession., Bloomberg 1/9/2009 5:17:09 AM

Employers shed a net 34,400 workers after a drop of 70,600 in November, Statistics Canada said today in Ottawa. The jobless rate rose to a three-year high of 6.6 percent from 6.3 percent the month before.

Bank of Canada Governor Mark Carney and his rate-setting panel last month slashed the target for overnight loans between commercial banks by three-quarters of a point to 1.5 percent, the lowest since 1958. Policy makers said Canada was entering a recession amid a broader and deeper” global slump.

Gross domestic product will shrink by 0.4 percent next year and generate the country’s first budget deficit in more than a decade, Finance Minister Jim Flaherty said last month. He is scheduled to present a budget on Jan. 27 including an economic stimulus package of up to C$25 billion ($21.1 billion).

Employers shed 70,700 full-time positions while adding 36,200 part-time workers. Statistics Canada said 91,200 of the 98,300 jobs created in 2008 were part-time.

Construction companies slashed payrolls by 44,300 workers in December, the sharpest monthly decline since at least 1976, the agency said. Another 13,100 jobs were lost in professional, scientific and technical services. Employment in accommodation and food services fell by 12,200.

Canada’s economy is struggling because of weak demand in the U.S., the country’s main market, and slumping prices for commodities such as oil and wheat, which generate about half the country’s export revenue. Automakers and forestry companies have been among the hardest hit.

Central bank policy makers may cut the benchmark interest rate to an all-time low of 0.5 percent this year, economists from CIBC World Markets and Bank of Nova Scotia said during a panel discussion in Toronto on Jan. 7. The next rate decision for the Bank of Canada, which was founded in 1934, is Jan. 20.

The western province of Alberta, which in recent years has benefited from an oil boom, fared the worst in December with a net job loss of 15,800. Alberta’s unemployment rate jumped to 4.1 percent from 3.4 percent in November.

Canadian wage growth in December advanced at a pace of 4.3 percent, compared with 4.6 percent in November. That’s still faster than inflation, with consumer prices advancing 2 percent in November from a year earlier.

Canada’s Jobless Rate Rises to 3-Year High