OTTAWA: Canada posted the single worst monthly jobs loss in more than four years in March, another sign the economy is struggling to cope with weak foreign markets and a strong Canadian dollar.
Canada shed 54,500 positions in March, more than wiping out the 50,700 jobs that had been added in February, Statistic Canada said on Friday. Market operators had expected a modest gain of 8,500 jobs. It was the biggest monthly job loss since February 2009, when the economy shed 69,300 positions.
"This was a lot weaker than expected so far this year it is pointing to weakening employment relative to strong gains in the second half of last year," said Paul Ferley, assistant chief economist at the Royal Bank of Canada.
"It's going to keep the Bank of Canada cautious." The economy's continuing challenges mean there is little pressure on the Bank of Canada to raise interest rates from near-record lows.
Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that after the data traders increased their small bets on a rate cut in late 2013.
Adding to the gloom were the trade figures for February, which showed Canada's deficit increased to C$1.02 billion on lower exports and higher imports. Traders had expected a small surplus.
The Canadian dollar weakened to a session low against its US counterpart after employment data in both nations came in far weaker than expected.
The Canadian currency fell to C$1.0207 to the US dollar, or 97.97 US cents, down from Thursday's North American session close at C$1.0123 to the US dollar, or 98.78 US cents, after the data was released. Virtually all the job losses were full-time.
The hard-hit manufacturing sector, particularly affected by the strong Canadian dollar and struggling customers, lost 24,200 jobs.
"This helps to reconcile some of the difference between some of the slowing economic activity with the labor market that had previously been a lot stronger than we would have anticipated it's the labor market basically playing catch-up," said David Tulk, chief Canada macro strategist at TD Securities.
Employment also fell in the public administration and accommodation and food services sectors.
Private sector employment dropped by 85,400 positions while the number of self-employed grew by 38,700.
The average hourly wage of permanent employees was 2.1 percent higher in March 2013 than in March 2012, down from the 2.2 percent year-on-year advance recorded in February 2013.
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