Canada Lost 55,200 Jobs in July

Canadian employers unexpectedly shed jobs in July for the second straight month as manufacturers responded to slow demand for their goods by trimming payrolls.

Employers fired 55,200 workers, Statistics Canada said today in Ottawa, after a drop of 5,000 the month before. The jobless rate fell to 6.1 percent from 6.2 percent as 74,100 people left the labor force. Economists anticipated 5,000 new jobs and the same jobless rate, according to the median of 22 estimates in Bloomberg surveys.

The economy is sputtering as factories struggle to sell products south of the border because of low U.S. consumer confidence and a Canadian currency that's appreciated about 16 percent in the past three years. The Bank of Canada signaled last month that interest rates will stay put for the foreseeable future, with growth virtually stalled and inflation beyond the upper limit of policy makers' target range.

June-July marked the first period since January 2006 that employers shed workers for two straight months. Factories fired 32,300 workers in July, led by manufacturers in Ontario, Canada's biggest province and its goods-producing hub.

Canada lost 7,100 full-time jobs and 48,100 part-time jobs in July, particularly young workers, the statistics agency said. Services-related employment fell by a net 37,300, while goods- producing companies shed a net 17,800 workers.

In its last quarterly forecast on July 17, the central bank said growth will slow as an ``export drag'' offsets the domestic spending that's powered expansion in recent years. Policy makers said the economy will grow 1 percent this year, the slowest since 1992 when Canada had its last recession.

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, and 0.1 percent in May on a month-over-month basis.

Some service companies were hurt by the slower growth. Payrolls for professional, scientific and technical services fell by 15,300 employees and those for business, building and other support services dropped by 30,100, the statistics agency said. Retailers and wholesalers eliminated 33,600 positions.

Canadian wage growth also is slowing, gaining 4 percent in July from a year earlier compared with 4.4 percent in June and an 11-year high of 4.9 percent in February. Still, labor costs are rising faster than consumer prices, which gained 3.1 percent in June.

Canada has added a net 227,200 jobs in the past 12 months, even as the jobless rate rose from 6 percent last July, a sign that more people have entered the workforce than found work.

Canada Lost 55,200 Jobs in July, Bloomberg
8/8/2008 6:34:41 AM