The recovery in Canada's job market stalled in December as employers unexpectedly cut 2,600 jobs after heavy hiring in November, another sign the economic revival will be sluggish rather than in leaps and bounds. The data released by Statistics Canada on Friday showed the unemployment rate remained unchanged at 8.5 percent, as predict in a Reuters poll.
The job losses, which followed a 79,000-job gain in November, are small enough to be considered a typical reading but disappointed the market consensus of a 20,000 increase. The Canadian dollar fell immediately after the report but economists focused on evidence the economy are holding on to gradual gains made over the past few months.
This is consistent with an economy that is on the restore but at a relatively moderate pace says Don Drummond, chief economist at Toronto-Dominion Bank. The Canadian dollar fell as low as C$1.0386 or 96.28 U.S. cents, from C$1.0314 or 96.96 cents just before the report.
The currency fully regained the lost ground 90 minutes later, however, after U.S. data demonstrated 85,000 job losses in December. It touched C$1.0306 or 97.03 U.S. cents after that report.
The Bank of Canada is likely to dismiss the worse-than-expected numbers when it sets interest rates on January 19. It is widely expected to keep its standard interest rate at an all-time low of 0.25 percent until mid-year.
Economists at Scotia Capital predicted this week that employment levels would recover to pre-crisis levels this year, adding more than 300,000 jobs.
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