* Canada unexpectedly sheds 54,500 jobs in March
* February trade deficit rises to C$1.02 billion
* Canadian dollar sinks on weak figures
* PMI data for March better than expected
By David Ljunggren
OTTAWA, April 5 Canada posted its 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 were added in February, Statistics Canada
said on Friday. Market operators had expected a modest gain of
It was the biggest monthly jobs 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 Royal Bank of Canada.
The economy's continuing challenges mean there is little
pressure on the Bank of Canada to raise interest rates from
near-record lows. "It's going to keep the Bank of Canada
cautious," Ferley said.
Overnight index swaps, which trade based on expectations for
the central bank's key policy rate, showed that after the data
traders increased their bets, albeit still small, on a rate cut
in late 2013.
In January, the central bank forecast first-quarter economic
growth of 2.3 percent, which now looks overly optimistic.
"The employment numbers did seem to be defying gravity up
until March and were not lining up with the underlying growth
numbers," said Doug Porter, chief economist at BMO Capital
Markets. "We knew one of them had to give way and it looks as if
employment has given way."
Adding to the gloom were trade figures for February that
showed Canada's deficit increased to C$1.02 billion on both
lower exports and higher imports. Traders had expected a
surplus of C$200 million.
In a contrary signal, the pace of purchasing activity jumped
more than expected in March. The seasonally adjusted Ivey
Purchasing Managers Index rose to 61.6 from 51.1 in February,
higher than the analysts' forecast of 52.4.
The Canadian dollar weakened against its U.S. counterpart
after the March 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 of C$1.0123 to the U.S. dollar, or 98.78 U.S.
cents, after the data was released.
On average, about 8,600 jobs per month have been lost in
Canada since January. This trend could pose a political
challenge for the Conservative government, which likes to boast
Canada has the most impressive economic record of any Group of
The official opposition New Democrats said Ottawa's focus on
keeping costs under control is wrong and called for more
"We need the stimulus now," said Peggy Nash, the party's
finance spokeswoman. The office of Finance Minister Jim Flaherty
did not respond to a request for comment.
Almost all the job losses were in full-time positions. The
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,"
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.
In the February trade figures, exports shrank by 0.6 percent
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.