Canada loses 9,300 net jobs in July as companies cut 139,000 full-time positions

A key engine of Canada’s remarkable recovery stalled last month as the economy shed 9,300 net jobs, and the unemployment rate rose for the first time in almost a year.

OTTAWA — A key engine of Canada’s remarkable recovery stalled last month as the economy shed 9,300 net jobs, and the unemployment rate rose for the first time in almost a year.

Statistics Canada said the economy shed a massive 139,000 full-time jobs, though not all of those jobs were lost — many of them were transferred into part-time work.

But the reversal was enough to hike the unemployment rate back to eight per cent.

Economists had expected a weak July, particularly because the economy had been churning out jobs at a far faster clip than appeared justified by the growth rate — adding 227,000 in the previous three months alone.

Despite the weaker expectations, the economist consensus was still predicting a modest increase and few expected such a hemorrhaging in the important full-time category.

Bank of Montreal economist Douglas Porter said the soft report was no reason to discount the mostly upbeat news since last July, and noted that the disappearance of 65,000 workers in the education sector, even during summer, was “highly suspect.”

“The first drop in employment since December does not signal a fundamental shift in the economy,” he said. “Overall, this report appears to be a very mild payback for previously amazing strength, and the bigger picture is that almost all of the recession’s job losses have been reversed in the very short space of a year. ”

In the United States, jobs numbers showed even more weakness. The U.S. Labor Department said that 131,000 jobs were lost in July, more than double what economists had expected.

The U.S. jobless rate held steady at 9.5 per cent, against an expected net decline of about 60,000, according to consensus expectations from economists.

Much of the decline in the U.S. was expected to be on the back of terminated government census jobs, but there had also been hopes the private sector would add about 90,000 jobs.

Instead, companies added a net total of 71,000 jobs in July, far below the roughly 200,000 needed each month to reduce the unemployment rate.

In Canada, the coming months may see further softness in jobs creation and an inching up of the unemployment rate, added Pascal Gauthier, a senior economist with TD Bank.

With economic activity slowing from the jump-start to the recession at the end of last year and beginning of 2010, he said the expectation is for gains to average an anaemic 15,000 per month the rest of the year, which will not be enough to prevent the jobless rate from rising further.

The markets viewed the report as discouraging, lopping 0.57 of a cent from the loonie to 97.80 cents US in early trading.

The biggest loss of full-time workers was in Quebec, which had a setback of 65,800, and Ontario, which lost 30,000 in the category.

The agency offered little explanation for such a reversal from what had been one of the world’s most robust employment records since the recession, other than a large 65,000 jobs loss in the education sector had historical precedence during the summer.

Still, it noted that over the past year, Canada’s jobs picture remains bright, just not as bright as it had been just a month ago when the agency reported almost all of the jobs shed during the 2008-2009 downturn had been recouped.

The tally now stands at 394,000 jobs created since last July, about 20,000 shy of the recession losses.

Aside from education workers — which included teachers, assistants, administrators and custodial staff — there were setbacks in the finance, insurance, real estate and leasing services.

Some positive news in the weak report was that the goods producing sector continued to grow, picking up 42,000 workers, including 28,500 in the still depressed factories sector.

July was also a healthy month for student jobs, which experienced a gain of 56,000 positions, the bulk coming in the 20 to 24 years age group.

On a regional basis, net employment, which includes part-time and full-time, rose in British Columbia and Alberta, but fell in Quebec and Ontario.

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