Canada July Jobs Loss Triple Economists’ Forecasts

Canada lost three times as many jobs as economists expected last month, led by construction and tourism-related businesses, signaling the country’s recovery from a recession may be slow.

Employment fell by 44,500, the third straight decline, Statistics Canada said today in Ottawa. The jobless rate remained at an 11-year high of 8.6 percent as the labor force shrank. Economists surveyed by Bloomberg predicted a job loss of 15,000 and unemployment at 8.8 percent.

Prime Minister Stephen Harper and Bank of Canada Governor Mark Carney have said the country’s job market will continue to worsen this year, even as Canada’s first recession since 1992 is expected to ease. The central bank cut its key interest rate to a record low 0.25 percent and the government predicts a record budget deficit as they act to revive the economy.

“Labor markets are a lagging indicator of activity, so I wouldn’t abandon hope the economy is emerging from recession,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “But there’s a little more doubt about that view now.”

Canada’s dollar weakened 0.6 percent to C$1.0841 at 7:17 a.m. in Toronto, from C$1.0777 yesterday. Earlier this week the currency reached C$1.0633, the strongest since Oct. 2.

Construction Employment Falls

Construction employment fell by 17,800 in July, while accommodation and food service companies fired 22,200 workers. Information, culture and recreation employment declined by 10,600.

The job losses were concentrated in the full-time, private- sector jobs that economists focus on as a measure of the labor market’s strength.

Full-time employment fell by 29,100 positions, Statistics Canada said, while part-time jobs decreased 15,400. The number of employees at private companies fell by 74,900, while government employment dropped 4,400 and self-employment rose by 34,800.

Manufacturing employment fell by another 6,500 in July, bringing the total loss since October to 218,000, or 11 percent, Statistics Canada said.

“Depending on what happens in the market, we’ll continue to adjust it if we think it’s necessary,” said Neil Manning, chief executive officer of Wajax Income Fund, which has cut payrolls by 15 percent, according to a transcript of an Aug. 5 conference call. The Mississauga, Ontario-based company sells parts and equipment to industrial companies.

Auto Workers Hit Hard

Automotive workers have been among the hardest hit, as the bankruptcies of Chrysler Group LLC and General Motors Corp. led to slower production, dealership closures and shuttered parts suppliers.

Governor Carney said July 23 the country’s stronger dollar is threatening the recovery and he is watching it closely. That was two days after he kept the benchmark rate at 0.25 percent and repeated he intends to keep it there through the second quarter of 2010 unless the inflation outlook shifts.

Unemployment will average 9.3 percent in the fourth quarter, according to a separate Bloomberg News economist survey. That suggests joblessness may reach a lower peak than the 12.1 percent rate set in November 1992.