Sun, Dec 05, 2004 - Page 11 News List

Jobless rate in Canada climbs to 7.3%


The steady rise in the value of the Canadian dollar left a clear imprint on Friday on the job market by slowing growth, cutting positions and pushing the unemployment rate for last month up to 7.3 percent.

More than 25,000 full-time positions were cut across the country last month, which helped to drive the unemployment rate up from 7.1 percent in October, Statistics Canada said.

Many of the losses were once again in the manufacturing sector, which has shed 52,000 jobs since July, in part due to a strong dollar that makes exports more expensive and therefore, less popular.

"The loonie [Canadian dollar] has left its wingprints all over these numbers," said Doug Porter, senior economist with BMO Nesbitt Burns.

Analysts say the weak employment report practically locks in the likelihood the Bank of Canada will leave interest rates at current low levels, possibly well into next year.

The central bank had been steadily boosting borrowing costs and until this week had been dropping broad hints that it intended to continue tightening.

But the rise in the jobless rate -- coming three days after weak third-quarter GDP figures and a cut to second-quarter numbers -- paints a gloomy picture that's likely to stay the hand of central bank governor David Dodge.

Before Friday's jobs report, many thought the central bank, which last increased its key policy interest rate to 2.5 percent in October, would boost rates by another quarter-point next Tuesday.

But with just 4,600 net jobs added last month -- well below this year's monthly average of 18,000 -- it seems the economy is not as robust as the central bank might like.

Sectors directly affected by the rising Canadian dollar have been hardest hit.

Fully 18,000 jobs were lost in the manufacturing sector last month as the economy overall shed 25,300 full-time positions.

Tourism-related industries such as hotels and restaurants also cut jobs.

But those dependent on low interest rates, such as finance, real estates and construction, continue to do well.

Higher interest rates would only bolster the currency and possibly hurt the job market still more, warned Ken Georgetti, president of the Canadian Labor Congress.

This story has been viewed 3938 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top