* Canada unexpectedly sheds 54,500 jobs in March
* Canada trade deficit rises to C$1.02 billion
* Canadian dollar sinks on weak figures
By David Ljunggren
OTTAWA, April 5 Canada posted the 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. The March unemployment
rate rose to 7.2 percent, from 7.0 percent.
"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
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.
In January the central bank projected first-quarter growth
of 2.3 percent, which now looks overly optimistic. Data released
on March 28 showed GDP grew by just 0.2 percent in January.
"The employment numbers did seem to be defying gravity up
until March and were not lining up with the underlying growth
numbers. We knew one of them had to give way and it looks as if
employment has given way," said Doug Porter, chief economist at
BMO Capital Markets.
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
surplus of C$200 million.
The Canadian dollar weakened to a session low against its
U.S. counterpart after employment data in both nations came in
far weaker than expected.
The Canadian currency fell to C$1.0207 to the U.S.
dollar, or 97.97 U.S. cents, down from Thursday's North American
session close at C$1.0123 to the U.S. dollar, or 98.78 U.S.
cents, after the data was released.
Virtually all the job losses were in full-time positions.
The hard-hit manufacturing sector, particularly affected by the
strong Canadian dollar and struggling customers, lost 24,200
"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.
Analysts were similarly unimpressed by the February trade
figures. Exports shrank by 0.6 percent on lower shipments of
metals and non-metallic mineral products while imports edged up
by 0.1 percent.
Exports to the United States - which took 73.8 percent of
all Canadian exports in February - dropped by 1.1 percent, while
imports grew by 0.8 percent. As a result, Canada's trade surplus
with the United States fell to C$3.40 billion in February from
C$3.90 billion in January.