(Adds reaction from finance minister, analyst)
By David Ljunggren
OTTAWA, July 11 Canada unexpectedly shed 9,400
jobs in June and the unemployment rate rose to 7.1 percent from
May's 7.0 percent, underlining how employment growth has stalled
despite a recovery in the United States.
Statistics Canada said on Friday that the year-over year
gain was just 72,300 jobs, or 0.4 percent, the lowest annual
growth rate since the 0.4 percent recorded in February 2010.
Analysts surveyed by Reuters had expected a gain of 20,000
jobs in June.
"If you take the moving average for the first half of this
year, it suggests very minimal job growth so far in Canada, so
it has been a bit disappointing," said Paul Ferley, assistant
chief economist at the Royal Bank of Canada.
Market operators expect worries about soft economic growth
will keep the Bank of Canada from hiking interest rates until
late next year, a Reuters poll found on Thursday.
The bank's next scheduled interest rate announcement is on
Wednesday, when it will also issue its quarterly monetary policy
The central bank has kept its key interest rate at a near
record low 1.0 percent since September 2010 and says it will not
contemplate an increase until inflation picks up and the economy
absorbs more excess capacity.
"It means the Bank of Canada will continue to ignore the
recent upturn in inflation and focus on an economy that is yet
to kick into higher gear," said Sal Guatieri, senior economist
at BMO Capital Markets.
The economy created 33,500 full-time jobs in June but lost
43,000 part-time positions. Employment fell in manufacturing and
business, building and other support services, while more people
found jobs in construction.
The six-month moving average for employment growth jumped to
8,800 from 3,000 in May, when the figure included a net loss of
44,000 jobs in December 2013.
Commenting on the June report, Finance Minister Joe Oliver
said jobs numbers are variable, noting that in May there had
been an increase in part-time jobs.
"We expect that kind of monthly variation, but we believe
the economy is strong. We have created over 1 million jobs since
the recession," he told reporters in Toronto.
The Canadian dollar weakened against the greenback,
dropping to C$1.0686, or 93.58 U.S. cents, down from Thursday's
close of C$1.0647, or 93.92 U.S. cents.
The unimpressive jobs data followed recent reports
suggesting the economy might be gaining strength.
Inflation in May hit a 27-month high of 2.3 percent, above
the Bank of Canada's 2.0 percent target, while rising exports
almost wiped out Canada's trade deficit the same month.
Retail sales in April jumped by 1.1 percent to a record high
while wholesale sales that month advanced by 1.2 percent, twice
as fast as expected.
(Additional reporting by Solarina Ho, Euan Rocha and Leah
Schnurr in Toronto; Editing by Chizu Nomiyama, Bernadette Baum
and Peter Galloway)