Job growth stalls as economy slows

Overall job growth stalled last month — yet another indication that the red-hot economic growth that was a hallmark of the first half of this year has cooled markedly since then.

Statistics Canada said Friday the Canadian economy lost 6,600 jobs in September.

But the unemployment rate edged down by one-10th

 of a percentage point to eight per cent as fewer people — especially young people — were actively looking for work.

Economists had been expecting overall job growth of 10,000 last month, with the unemployment rate staying at 8.1 per cent.

Last month, part-time employment fell by 44,000, which offset an increase of 37,000 in full-time jobs.

That increase in the number of full-time jobs, combined with a 2.6 per cent month-over-month jump in total hours worked, means that the job report was a little rosier than suggested by the overall drop in the number of jobs, some analysts said.

"Still, today’s data highlight that the nation's job market is cooling on a trend basis in lockstep with the simmering down in the overall economy since the spring of the year," said TD deputy chief economist Derek Burleton in a morning commentary. 

In Washington for a weekend meeting of the IMF, Finance Minister Jim Flaherty called the rise in full-time jobs "encouraging," according to Reuters, and said it didn't surprise him. "Canadians ought to expect we will see moderate growth."   

But Prime Minister Stephen Harper, speaking in Edmonton, was more downbeat.

"The results are not as good as we would hope," he said. "It's not yet where we want it to be."  

Over the last three months, the economy has churned out an anemic average of slightly more than 6,000 jobs monthly.

That represents a sharp slowdown from the robust job creation numbers seen in the first six months of the year, when job growth averaged 51,500 monthly.

The most recent GDP figures for July, released last week, showed the economy shrank by 0.1 per cent from June's reading. That was the first contraction in almost a year.

Rate hike pause seen

The stalling in GDP growth, combined with Friday's jobs report, reinforces the widespread expectation that the Bank of Canada will leave its key lending rate unchanged later this month, following three consecutive quarter-point increases.   

"This solidifies the view that the Bank of Canada is now on hold," said BMO Capital Markets economist Doug Porter. 

Statistics Canada said youth employment took the biggest hit last month, as almost 42,000 jobs disappeared for those in the 15- to 24-year-old age bracket. The decline was concentrated in Ontario.

"Losses in recent months have erased gains from the start of the year, bringing youth employment back to levels of a year ago," Statistics Canada said.

The youth unemployment rate rose three-10ths of a percentage point to 14.9 per cent.

By province, there were employment declines in Ontario, Saskatchewan, New Brunswick and Prince Edward Island, while Quebec, Newfoundland and Labrador, and Nova Scotia posted gains.

In the last year, 349,000 jobs had been created, Statistics Canada says. About three-quarters of that growth has been in the private sector.