(Reuters) — Canada's economy generated fewer jobs than expected for the second straight month in October, increasing the likelihood that any further interest rate hikes by the Bank of Canada will be pushed into late next year.
About 3,000 people found work in the month, according to Statistics Canada data released on Friday. That was not enough to offset the 6,600 jobs lost in September and below the 15,000 employment gain forecast by analysts in a Reuters poll.
The Canadian dollar briefly fell to a session low after the data but quickly recovered as markets digested some of the slightly more upbeat details in the report.
"I think there might be a trace of disappointment on the headline number, but I think on balance this doesn't move the needle in a major way," said Doug Porter, deputy chief economist at BMO Capital Markets.
The Bank of Canada, which kept its key interest rate on hold last month after three straight increases to one per cent, is widely expected to stay on the sidelines in December and well into next year.
"It's certainly not strong enough to get the Bank of Canada to change their mind on staying on hold any time soon, but by the same token, it's not particularly weak, so I don't think this really has a major impact on Bank of Canada policy," Porter said.
The unemployment rate dropped to 7.9 per cent from eight per cent in September.
The Canadian dollar fell to a session low of C$1.0095 to the U.S. dollar, or 99.06 U.S. cents, from around C$1.0065 to the U.S. dollar, or 99.35 U.S. cents, before the data. It later recovered to trade nearly unchanged on the day. Canadian bonds were mildly lower.
Details more encouraging
The heaviest hiring took place in the information, culture and recreation sector, followed by construction, manufacturing and agriculture. Retail and wholesale trade industries let go workers.
Some details in the report were more encouraging. All the gains were in full-time jobs, while part-time employment fell for the third straight month. In the first half of this year part-time jobs grew almost three times as fast as full-time ones.
Similarly, private sector hiring outpaced that of the public sector, suggesting a more deeply entrenched recovery.
The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressures, rose 2.1 per cent in October from a year earlier. The equivalent figure for September was 2.5 per cent.
Unlike in the United States, Canadian employment levels have returned to pre-recession levels. But Statscan said the jobless rate has stayed stubbornly above the pre-crisis 6.2 per cent level largely because the working-age population has grown 2.9 per cent and the labor force — those looking for work — has risen 1.9 per cent.
Despite the gains, full-time employment remains well below its peak, prompting concerns about the quality of jobs.
A report by CIBC this week said the public sector and construction industry, helped by stimulus spending, have accounted for one-third of all jobs created during the recovery.