Canada lost 34,400 jobs in December, a figure that was worse than economists had been expecting, as the economy weakened.

Statistics Canada said Friday the big loss was the result of a drop of 70,700 full-time jobs. That was partially offset by a rise in the number of people working part-time.

Minister of Finance Jim Flaherty, seen in Whitby, Ont., on Thursday, told Canadians to expect more job losses in 2009. (Nathan Denette/Canadian Press)

Speaking in Thornhill, Ont., prior to another round of consultations before his Jan. 27 budget, Finance Minister Jim Flaherty said Canada is "in for a very difficult year."

"We, regrettably, are going to have to expect continuing job losses in Canada," he told reporters.

Flaherty said he has received many suggestions during his consultations on what to include in his budget on how to help the unemployed, such as retraining and work-sharing.

In advance of the employment report, economists had been expecting a net loss of 20,000 jobs in Canada for the month.

With the decline in employment, the jobless rate rose by 0.3 percentage points to hit 6.6 per cent, the highest since January 2006.

"The jobless rate is now up 0.8 [percentage] points from its March low of 5.8 per cent, a classic early warning signal of the onset of recession," said BMO Capital Markets economist Douglas Porter.

Weakness in the construction industry was a major factor in the December jobs report, with 44,000 jobs lost in the sector. Statistics Canada said that was one of the largest monthly losses for the industry in more than three decades.

Employment in transportation and warehousing was up 23,000 in December, while employment in other sectors was little changed last month.

Largest job loss in Alberta

The private sector suffered a loss of 59,400 jobs, which was made up somewhat by the addition of roughly 20,500 jobs in the public sector.

Employment edged down in most provinces, with Alberta posting the largest loss as it shed about 16,000 jobs. The province's unemployment rate rose by 0.7 percentage points to 4.1 per cent, but that was still the lowest in the country.

The December losses follow a big drop in November of 71,000 jobs.

CIBC World Markets economist Krishen Rangasamy said the latest job report should let the Bank of Canada push its key overnight lending rate below one per cent sooner rather than later.

"While Canada hasn't yet seen back-to-back quarterly GDP declines so far this cycle (a common misconception about what defines a recession), we’re well into a recession by other measures that clearly indicate a sustained and significant slowdown in economic activity, including Canada’s flagging labour market," Rangasamy said in a commentary.

"With forthcoming plant closures and layoffs already announced, it's clear that the worst is yet to come on the employment front, with the unemployment rate likely to creep up steadily towards eight per cent."