Canada's unemployment rate held steady at 7.6 per cent in December compared with the previous month as the economy created 22,000 jobs, Statistics Canada said Friday.

Despite the flat rate, the jobs total was slightly better than the 20,000 increase that analysts were expecting. Full-time employment rose by 38,000 in December, the fourth increase in the past five months. Full-time employment accounted for 81 per cent of total employment in December.

Quebec, Ontario, and Newfoundland and Labrador saw job gains, while British Columbia posted declines. Other provinces saw little change, Statistics Canada said. In November, the unemployment rate fell to 7.6 per cent and 15,200 new positions were created.

  Canada  U.S. 
 Unemployment rate  7.6% 9.4% 
 Peak rate  8.7% (Aug. 2009)  10.2% (Oct. 2009)
 Jobs created in 2010  368,500  1.1 million

"It was not a bad increase," Paul Ferley, assistant chief economist at RBC in Toronto, said of the new jobs. "This confirms that the Canadian economy continues to generate jobs,"

Prime Minister Stephen Harper said the numbers showing more Canadians working are "encouraging," but global recovery is still fragile and "significant challenges" remain.  

"We need to continue to focus on the economy and I encourage all opposition parties to do the same," Harper told reporters on Friday in Welland, Ont.

Statistics Canada said there were "notable employment increases" in December in manufacturing, transportation and warehousing, as well as in natural resources. However, employment declined in construction, health care and social assistance, wholesale and retail trade and agriculture.

Increases in the number of private-sector employees in December were partly offset by declines in self-employment. Some 16,000 part-time jobs also disappeared during the month.

"We're finishing 2010 on a strong note in manufacturing and hopefully that will continue through to 2011 supporting the Canadian economy," said Ferley.

U.S. jobs picture

The Canadian numbers paled in comparison with recent U.S. jobs data. On Friday, the Labor Department said the economy there added 103,000 jobs in December. And the U.S. unemployment rate fell slightly to 9.4 per cent for the month, the lowest level since May 2009.

Earlier this week, private-sector firm ADP reported that the U.S. economy added 297,000 jobs in December, the best month since the private sector firm started collecting data in 2000. ADP has a different way of tracking jobs and its figures are often different from the government's.

'Growth remains too weak to spur further meaningful declines.' — BMO economist Sal Guatieri

A stronger U.S. job market is good news for Canada, as an increase in American workers likely leads to more U.S. buyers of Canadian exports. 

"If you get a good number out of the U.S., it's going to basically flow into Canada at some point," CanadianForex senior vice-president John Curran said of the eye-popping ADP report earlier this week.

The huge gains in factory and transportation jobs in the Canadian jobs report provide a tantalizing hint that the upturn in the U.S. economy is spilling over into Canada, BMO economist Doug Porter noted.

But behind the topline optimism, there was some reason for concern when the numbers are examined more closely. More than 14.5 million Americans who want jobs don't have them, and the main reason for the dip in the unemployment rate was that 206,000 people stopped looking for work, dropping out of the labour force and as such are no longer counted in government data, School of Business professor Peter Morici noted on Friday. More than 44 per cent of unemployed Americans have been so for more than six months, a troubling trend.

U.S. Federal Reserve chair Ben Bernanke noted on Friday that even if the 100,000-jobs pace is maintained, "you won't see sustained declines in the unemployment rate."

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Statistics Canada says 22,000 jobs were created in December, helped by a boost in the manufacturing sector. ((J.P. Maczulski/Reuters))

Some 13 million private sector jobs must be created to bring the U.S. economy down to a healthy six per cent unemployment rate, Morici noted, and it's a long way off the 350,000-a-month pace.

"The sharp drop in the unemployment rate is a welcome surprise but job growth remains too weak to spur further meaningful declines," BMO economist Sal Guatieri said.

On both sides of the border, a stronger move in a positive direction will be needed before central bankers in Canada and the U.S. can make substantive hikes to lending rates, experts say.

"I think they will be encouraged that this job growth is continuing, but that unemployment rate is probably still viewed as being too high," Ferley said.

"As a result, I think they will probably remain on the sidelines in the near term to help sustain this improvement and hopefully strengthen the trend putting more downward pressure on the unemployment rate," he added.