Canadian dollar gets small boost from January job gains
Canada exceeds economists' expectations and adds 29,400 jobs
Canada gained 29,400 jobs in January, which pushed down the unemployment rate 0.2 percentage points to seven per cent, according to the latest labour force survey released today by Statistics Canada.
The January increase was higher than the 20,000 new jobs that economists had expected and was a welcome turnaround from the 45,900 jobs lost in December.
"The trend is good and this is comforting as we plan the budget and plan modest steady job growth in Canada," finance minister Jim Flaherty said in response to the new numbers.
The dollar responded positively to the news, inching up 0.42 of a cent to 90.75 cents US before settling in at 90.59 cents US at the end of the day. The S&P/TSX composite index shed some strong early gains by midday and was up about four points to 13,717.75.
Better full-time job creation
A rise in full-time work was mainly responsible for the job gains, the agency said, with 50,500 full-time positions added in January, while part-time employment declined by 21,100.
The larger number of full-time jobs was a relief for TD chief economist Craig Alexander, but in an interview with CBC News he pointed to the volatility of Canada's job creation numbers month to month.
Alexander said prefers to consider the six-month average, which shows about 15,000 jobs created a month, consistent with other economic data that shows the economy increasing a moderate pace.
“I think the job numbers today were a welcome relief after the terrible December number,” he said.
“It’s great news the labour market isn’t weakening the way the December number was show, but we have to keep our positive sentiments in check because you have to take into account the volatility that we’ve been seeing in the labour force number,” he added.
Accommodation, food services see biggest gains
The biggest job gains last month were in the accommodation and food-services sector, with an increase of 17,000 workers, followed by health and social services, which gained 16,900 jobs, and professional, scientific and technical services, which added 16,600 positions.
Business, building and other support services lost 25,400 jobs, which brought employment in that sector back to what it was 12 months earlier, Statistics Canada said.
Public administration shed 16,000 jobs in January, and over the year, public sector employment was down 58,000, a drop of 5.8 per cent. That was with an employment decline over the period, Statistics Canada said.
Overall, the public sector saw a gain of 14,700 jobs between December and January and the private sector shed 13,600 workers. It was private businesses that saw most of the gains, adding a total of 118,600 jobs between January 2013 and last month while the public sector gained 19,500 workers in that period.
"While no ball of fire, today's solid comeback represents a nice recovery from the ugliness in last month's Canadian employment report," BMO Capital Markets chief economist Doug Porter said in a report.
"Notably, though, the unemployment rate at 7.0 per cent is precisely unchanged from three months ago and from a year ago. In other words, the underlying trend in job growth is just firm enough to keep up with labour force population growth – no better, no worse."
The proportion of people (employed or underemployed) actively looking for work, known as the labour force participation rate, remained virtually unchanged in January at 66.3 per cent, compared to 66.4 per cent a month earlier.
U.S. jobless rate lowest since October 2008
According to other figures released Friday, the U.S. added 113,000 jobs, fewer than the monthly average for 2013, which was 194,000, but more than the 75,000 jobs gained in December, the lowest increase in three years.
Economists had been expecting a gain of between 170,000 and 180,000 positions. Payroll firm ADP had said on Wednesday that the private sector in the U.S. had added 175,000 jobs, although its numbers are usually higher than the official government figures.
The U.S. unemployment rate decreased slightly in January to 6.6 per cent, the lowest it has been since October 2008 and down from 6.7 per cent in December 2013.
There were also more people participating in the labour force in January, which pushed up the participation rate 0.2 percentage points from December to 63 per cent.
The construction sector saw the biggest job gains, adding 48,000 workers in January, more than enough to offset the 22,000 jobs that were lost in December.
Construction, manufacturing, and mining and drilling companies together had a combined gain of 76,000 jobs, which some analysts took as a sign of a recovering economy.
"You rarely see expansions in these industries without the economy being in fairly healthy shape," Gary Burtless, an economist at Brookings Institution, told The Associated Press.
Professional and business services also had a strong month, adding 36,000 jobs. Growth in this sector had been consistent throughout 2013, with gains of about 55,000 jobs a month on average.
Employment in the leisure and hospitality industries has also been growing, averaging 38,000 new jobs a month. In January, this sector gained 24,000 workers.
Retail and federal government work, meanwhile, both saw a decline in employment in January, with the U..S Postal Service alone losing 9,000 jobs.
Speculation on Fed tapering
The weaker than expected job results had some in the U.S. wondering whether the Federal Reserve's decision in December to start scaling back its economic stimulus measures may have been premature.
Recent signs of tepid growth in the U.S. manufacturing sector and trouble in the emerging economies of countries such as China, Turkey and India have roiled world markets, but on Friday, investors seemed relatively pleased with the job numbers.
The Dow Jones industrial average was down more than 70 points in early trading, but rallied soon after and by midday had risen more than 58 points to 15,687.16. The Nasdaq moved up about 36 points to 4,093.25 while the S&P 500 were up almost 10 points to 1,783.01.
Some took the gains in the markets as a sign that traders think the lukewarm jobs numbers in the U.S. will mean that the Fed will hold off on making further cuts to its stimulus program, but not everybody agreed with that interpretation.
"Given the strength of economic growth in the second half of last year, we expect to see a rebound in the monthly gains over the next few months," said Paul Ashworth, a Capital Economics economist, who expects the Fed to continue to wind down its stimulus program.
With files from The Canadian Press and The Associated Press