Dollar jumps almost a cent as Canada adds another 20,900 jobs

The Canadian economy created thousands of full-time jobs last month, but most of the hiring came in the public sector, while private employers continued to shed positions as they recover slowly from recession.

OTTAWA — The Canadian economy created thousands of full-time jobs last month, but most of the hiring came in the public sector, while private employers continued to shed positions as they recover slowly from recession.

Nearly 21,000 full-time jobs were added, pushing the national unemployment rate down to 8.2 per cent from 8.3 per cent, its lowest level in nearly a year.

Hiring during the Olympics in Vancouver may have affected the jobs numbers, but economists noted the February report continues what they have seen for months — that the economy is slowly rebounding from last year’s painful recession.

Specifically, the economy created 20,900 net jobs in February as full time job growth of 60,000 offset the loss of 40,000 part-time jobs. That suggests many employers may be switching part-time positions to full-time work as their business conditions improve.

Many of the full-time jobs went to men over 55 years old, a group of workers that fared better than most during the recession and have marketable skills that companies and public employers want as the economy recovers.

The public sector added 45,600 jobs in February, while private employers shed 7,500 jobs. Those numbers reflect continued growth in health care education and administration as well as the slow recovery in parts of the economy most impacted by the recession — manufacturing, transport and warehousing.

Overall, the Canadian economy has added 159,000 jobs since last July, recouping more than a third of the 417,000 jobs lost during the recession. During that time, the unemployment rate has dropped half a percentage point from its August peak of 8.7 per cent.

In response to the February report, the loonie jumped to its highest level in 20 months. The Canadian dollar — which has been gaining against the American loonie in recent days — soared above 98 cents US on the news and was trading at 98.36 cents in late morning, up from the previous day’s 97.68-cent close.

Finance Minister Jim Flaherty called the employment news positive, but cautioned against reading too much into one month’s data.

“I’m hearing fairly positive news from businesses, small and larger, across Canada but I’m not hearing ecstatic news,” he said in Toronto. “I wouldn’t put it any stronger than that.”

He called it significant that Canada’s unemployment rate — now down to 8.2 per cent — is about 1.5 points better than that in the United States, where the recession was deeper and the recovery much slower.

The consensus among economists before the report had been for about 15,000 jobs to be created, although some had suggested there might be more because of the temporary impact of the Olympic games in Vancouver and Whistler, B.C., and unseasonably warm weather in many parts of the country.

Economists said the dollar’s rise Friday was supported by the fact that the underlying data was even stronger than the headline, with 60,200 additional full-time jobs and pick-ups in the goods producing sector, particularly manufacturing and natural resources.

“The currency market is very wise, it decided that the underlying details were even better than the headline number,” said Douglas Porter, deputy chief economist with BMO Capital Markets.

“The advance in full-time jobs (is) quite an impressive achievement, and apparently without much of an artificial boost from the Olympics and/or the mild weather.”

The Olympic effect was noticeable, but it was mild. There was a pickup the 27,000 additional jobs in the accommodation and food services industries, but only 5,700 were in British Columbia.

It was less clear why 26,000 older male workers joined the workforce in February, although Statistics Canada said this group had fared better than most during the recession.

One explanation is that experienced workers are more adept at adjusting to a downturn, said TD Bank economist Pascal Gauthier, turning to self-employment and consulting rather than the jobless rolls.

Susan Eng, a vice-president at the Canadian Association for Retired Persons, said the trend toward hiring older men will likely continue because many were given early retirement packages during the recession and now have the time, energy and expertise to hit the ground running at a new employer.

“This is a demonstration that the marketplace has spoken and does in fact see value here because you can imagine the tide that they’re fighting . . .,” she said.

There’s little question that last month’s employment advance, on the heels of the 43,000 gain in January, has started the year off on a strong note.

Economists are now expecting first quarter growth to be in the three-to-four per cent range, following the robust five-per-cent pop in the last quarter of 2009.

“It’s just a continuation of a recovery that’s gaining more and more traction,” said Gauthier.

On Thursday, the Royal Bank upgraded its forecast for the Canadian economy this year to 3.1-per-cent growth, and 3.9 per cent for 2011.

Porter suggested the better economic news starts the “countdown clock” to the Bank of Canada raising its key interest rates.

He predicted the bank will likely stick to its conditional commitment to keep the policy rate at 0.25 per cent until July, but only if inflation cools in the next few months.

Labour economist Erin Weir of the United Steelworkers also called the report impressive, noting the loss of 39,000 part-time workers suggested many are being upgraded to full-time.

February’s unemployment rate of 8.2 per cent was the lowest reported by Statistics Canada since last April, before the country began to recover from the recession.

If there was a negative aspect to the report, it was that 46,000 public service jobs were created in February. Economists prefer jobs to be created in the private, particularly exporting, sector.

Public sector jobs growth could be unsustainable as the federal and provincial governments focus on spending cuts over the next year or two to pare down their budget deficits.

The goods producing industries, which posted large losses during last year’s slump, fared well as troubled manufacturing picked up 17,000 workers, and natural resources rose 11,000.

The construction industry dropped 11,000 workers, an unexpected development given the weather, the robust housing market and government infrastructure spending.

Other sectors suffering setbacks included retail and wholesale trade (34,000), finance, insurance and leasing (22,000), and other services (13,000).

Meanwhile, business, building and other support services, and health care and social assistance were among the winners.

Regionally, most provinces were either on the positive side of the ledger or flat, with the notable exception of Alberta, which suffered a 15,000 employment decline in February.

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