Canada's economy grew by 35,000 jobs in June, nearly double expectations, fuelling speculation the Bank of Canada will raise interest rates next week.

For the fifth straight month, Canada's unemployment rate remained at a 33-year low of 6.1 per cent, Statistics Canada said Friday.

"Against this backdrop, the Bank of Canada appears fully primed to hike rates next week," Douglas Porter, deputy chief economist, BMO Capital Markets, said in a report.

"We expect the bank to raise the policy rate by 25 basis points next week and by a further 50 basis points in two 25 basis-point moves by the end of 2007," said RBC Economics.

The strong jobs report pushed the Canadian dollar higher Friday. The loonie rose to  95.33 cents U.S. — its highest level since May 26, 1977 — up seven-tenths of a cent over Thursday's close.

In June, manufacturing jobs continued to decline, while the biggest employment increases were in retail and wholesale trade, business, building and other support services.

For the second month in a row, full-time work rose in June, while part-time employment fell, Statistics Canada said.

Adult women accounted for most of June's increase in full-time and all of the decline in part-time employment, added the agency.

The biggest job gains came in Quebec, Alberta and New Brunswick. Job growth in Saskatchewan and Newfoundland and Labrador dropped while Ontario remained mostly unchanged.

Two-thirds of the job growth came from self-employed workers, while the rest were from company employees.

"The labour market remains drum-tight, as clearly displayed by the continued low jobless rate and now some bubbling upward pressure on wages," Porter added.

Looking at the first half of 2007, the Canadian economy added a total of 197,000 jobs, a 1.2 per cent increase — similar to growth seen over the first half of 2006.

The provinces with the biggest employment gains for the six-month period were New Brunswick at 3.1 per cent, Alberta at 2.5 per cent, and British Columbia with a 1.9 per cent rise.

Ontario, which makes up nearly 40 per cent of total employment in Canada, grew only 0.4 per cent over the first half of 2007.