Canada's job losses in January surpassed anything seen during the previous economic downturns in the 1980s and 1990s, Statistics Canada said Friday.

With the economy staggering in recession, Canada's unemployment rate shot up by 0.6 percentage points in January to 7.2 per cent as 129,000 jobs were lost. Almost all of the job losses were in full-time work.

Since October, the battered Canadian economy has lost 213,000 jobs.

Between January 2008 and January 2009, overall employment across the country was down by 88,600 jobs.

The job losses far exceeded the drop of 40,000 that economists had been projecting. "Horrible" and "shockingly poor" were some of the words they used in reaction to the January jobless figures.

"Everybody is prepared for a pretty weak first quarter, but these numbers are probably surprising the more bearish views," said Royal Bank chief economist Craig Wright.

"Unfortunately we will see more job losses," said Sal Guatieri, a senior economist at BMO Capital Markets. "This is the start of a wave of job losses that will likely extend through the first half of this year."

BMO economists expect the Canadian unemployment rate to break through eight per cent by the end of this year. To combat the softening economy, the Bank of Canada is expected to announce another interest rate cut in March, BMO said.

Manufacturing meltdown

The manufacturing sector lost 101,000 jobs during January, the most on record for the industry. The bulk of January's losses in manufacturing were concentrated in Ontario, which lost 36,000 positions; Quebec, which lost 30,000; and British Columbia, which shed 18,000 manufacturing positions.

Losses in manufacturing were most pronounced in motor vehicle manufacturing. Employment also fell in January in the production of furniture; computers and electronics; appliances and components; and clothing manufacturing.

Employment also fell by 30,000 in transportation and warehousing, largely in truck transportation in Ontario, while employment in business, building and other support services declined by 22,000.

The health-care and social assistance sector continued to see strong job gains, as it added 31,000 jobs during the month.

Ontario plunges

Ontario lost 71,000 jobs last month, the largest monthly drop in more than three decades, Statistics Canada said. The drop pushed the province's unemployment rate up by 0.8 percentage points to eight per cent — its highest level since November 1997.

British Columbia shed 35,000 jobs as its unemployment rate also increased by 0.8 percentage points to 6.1 per cent.

Quebec's employment fell by 26,000 jobs, with all the losses coming in part-time work. The province's unemployment rate rose to 7.7 per cent. January saw large declines in public administration, following gains in December associated with hiring for the provincial election.