Canada's economy churned out a much-better-than-expected 51,100 new jobs in September — enough to lower the country's unemployment rate to 5.9 per cent.

That's the lowest jobless rate since November 1974, Statistics Canada said Friday.

Economists had been expecting the net addition of only 15,000 jobs and had looked for the jobless rate to stay at August's six per cent.

The strong job growth sent investors flocking to buy Canadian dollars. The loonie opened up more than one cent at $1.014 US on foreign exchange markets Friday.

Ahead of 2006

So far this year, the economy has created 283,000 new jobs — expanding at a faster rate than it did last year.

Full-time, public-sector jobs accounted for the bulk of the job growth last month, with strong gains seen in educational services and public administration. Retail trade, however, recorded a substantial loss in employment as younger workers headed back to school.

Manufacturing lost another 3,200 jobs, bringing losses in the sector to more than 71,000 in the past year as the high dollar makes it more difficult for exporters to do business.

Alberta continued to have the lowest jobless rate among the provinces, at 3.6 per cent. But its booming neighbour, Saskatchewan, saw its jobless rate fall by more than a percentage point to 3.8 per cent.

Ontario churned out 29,700 jobs last month — enough to lower the unemployment rate by 0.2 percentage points to 6.2 per cent.

The employment boom among workers older than age 55 continued, with another 23,000 positions added. Employment among older workers so far this year is growing at a faster rate than for any other age group.  

Core age workers — those aged 25 to 54 — recorded their first significant gain in employment this year, adding 40,000 jobs.

Wages pressures build

The September Labour Force Survey also showed wage pressures were continuing to build. The average hourly wage was 4.2 per cent higher than a year earlier, far surpassing the 1.7 per cent increase in the consumer price index.

"This is the largest estimated year-over-year increase in average hourly wages since the Labour Force Survey began collecting this information in 1997," Statistics Canada said.

Analysts said the likelihood of rate cuts by the Bank of Canada has lessened dramatically with the strong jobs report and higher wage inflation.

"This show of strength, along with steady upward wage pressures, will keep the Bank of Canada firmly on hold through the end of this year, if not even longer," BMO Capital Markets economist Doug Porter said in a morning commentary.