Unemployment rate dips to 7.9%

Job growth stalled for a second straight month in October, as the economy created just 3,000 new positions, Statistics Canada said Friday.

The unemployment rate slipped a tenth of a percentage point to 7.9 per cent. Canada's jobless rate has remained in the eight per cent range for the past seven months.

The number of jobs created was well below economists' consensus expectations of a gain of 15,000.

The jobless rate fell because 4,300 fewer people were in the labour force looking for work, agency figures showed.

The economy churned out 47,000 full-time jobs in October, offsetting the loss of about 44,000 part-time jobs.

Despite the lacklustre job creation numbers, economists said the report did suggest that employment conditions are getting better, if slowly.

"[The] report continues to highlight a slowing pace of job creation but more gradually than appears on the surface," said TD Bank deputy chief economist Derek Burleton. 

"In particular, a shift toward full-time positions and ongoing growth in total hours worked are bright spots."

"Today’s soggy employment gain extends the broader theme of much more modest growth in Canada than seen in the opening months of the year," said BMO Capital Market deputy chief economist Doug Porter. "However, the details of the jobs data were uniformly better than the headline would suggest, and are consistent with steady underlying improvement."

Gains in private sector

Most of the job gains — 37,800 — took place in the private sector. 

Almost 21,000 jobs were added in construction, continuing a trend that began more than a year ago. Manufacturing added almost 10,000 jobs, its second straight month of gains. But wholesale and retail trade shed 28,900 positions.

Alberta added 17,000 jobs — enough to lower its unemployment rate by 2/10ths of a percentage point to 6.0 per cent.

Nova Scotia, which lost 8,600 jobs, saw its jobless rate jump 8/10ths of a percentage point to 9.8 per cent.

There was little change in the other provinces.

Job growth slows

Despite the sluggish job growth of the last couple of months, the Canadian job market is faring much better than the U.S. market, analysts said.

"Overall conditions in Canada's labour market are much stronger than in the U.S. and our expectation that the economy will grow at an above-potential pace in the final quarter of the year is consistent with job gains in Canada continuing," said RBC assistant chief economist Dawn Desjardins.

While overall employment levels — as defined by the number of jobs in the economy — have rebounded to pre-recession levels seen in October 2008, the unemployment rate has remained well above pre-recession levels of 6.2 per cent, Statistics Canada noted.

Employment has risen by 375,000 in the last year, but has slowed significantly in recent months.

In the first six months of 2010, for instance, an average of 51,000 jobs a month were created. But recent monthly gains have averaged just 5,700.