OTTAWA (Reuters) - Canada's sluggish economy caused the job market to stall unexpectedly in January, adding to a string of soft data and providing another reason for the Bank of Canada to keep its policy stimulative for longer.
The economy created a negligible 2,300 net new jobs in the month as layoffs in construction and professional services offset modest hiring in manufacturing, Statistics Canada said on Friday.
The jobless rate ticked higher to 7.6 per cent from 7.5 per cent, the highest since April 2011, as more people were looking for work.
Analysts in a Reuters poll had predicted 23,100 new positions and a jobless rate holding steady from December at 7.5 per cent.
"Obviously, after a weak fourth quarter, we were expecting more of a bounce back in the first quarter, but no signs of it in this report," said Paul Ferley, assistant chief economist at RBC.
Canada recovered all the jobs lost during the recession one year ago as employment growth outperformed the United States in the last couple of years.
That trend may be reversed this year. Hiring tapered off in the second half of 2011, although job gains in December had raised hopes of a continued comeback in January.
In the year to December, Canada added 129,000 jobs, a gain of 0.7 per cent and the total number of hours worked increased by 1.4 per cent.
Full-time employment fell by 3,600 while part-time employment rose by 5,900 in the first month of 2012 and hiring was even across the public and private sectors. The number of self-employed fell by 37,000 while employees increased by 39,000, Statscan said.
The hourly wage of permanent employees, closely watched by the Bank of Canada for signs of inflationary pressures, rose 2.2 per cent in January compared with one year earlier, down from 2.4 per cent in December.