Canada Shed 5,000 Jobs

Canadian employers unexpectedly shed jobs in June for the first time this year, pushing the unemployment rate up and showing that the effects of the U.S. slowdown are spreading through the country's economy.

Employers fired 5,000 workers, Statistics Canada said today, after a gain of 8,400 the month before. The jobless rate rose to 6.2 percent, the highest since April 2007. Economists anticipated 8,000 new jobs and the same jobless rate, according to the median of 23 and 21 estimates in Bloomberg surveys.

The job loss may complicate the Bank of Canada's interest rate decision next week, as it tries to contain inflation on one hand and boost growth amid falling exports on the other. Policy makers unexpectedly kept borrowing costs unchanged at 3 percent last month, saying rising prices had become a bigger concern than slower expansion.

Canada's dollar weakened 0.9 percent to C$1.0173 per U.S. dollar at 7:36 a.m. in Toronto from C$1.0085 yesterday, the biggest drop since June 30. One Canadian dollar buys 98.30 U.S. cents.

Bank of Canada Governor Mark Carney will leave rates unchanged at 3 percent at the July 15 meeting, according to all but one of 17 economists in a Bloomberg survey. The central bank updates its quarterly economic outlook on July 17.

In its last economic forecast, the bank said growth will slow as the ``export drag'' offsets the domestic spending that's powered the economy in recent years. The economy shrank in the first quarter for the first time since 2003, dragged down by automobile exports. Gross domestic product contracted at a 0.3 percent annualized rate, Statistics Canada said May 30.

Canada lost 39,200 full-time jobs in June, while adding 34,200 part-time jobs. Services-related employment fell by 5,400, while goods-producing companies added 300 workers, the statistics agency said.

Some industries remain buoyant. Payrolls for professional, scientific and technical services rose by 37,100 employees and those for information, culture and recreation gained 10,100, the statistics agency also said.

Canada has added a net 290,000 jobs over the past 12 months, escaping the brunt of the economic woes in the U.S.

Canada Shed 5,000 Jobs, Bloomberg
7/11/2008 6:46:16 AM