UPDATE 4-Canada hit by biggest monthly job loss in 17 years
(Adds comments from finance minister, union federation president, paragraphs 12-13, 18)
OTTAWA, Aug 8 (Reuters) - A surprisingly large 55,000 jobs were lost in Canada in July, the biggest monthly job loss since the 1991 recession.
The Canadian dollar dropped immediately and bonds rose in reaction to release of the Statistics Canada employment report on Friday morning. Economists called the figures "extremely ugly" and "stunningly bad".
Most of the losses, 48,000, were in part-time work and overall employment remained 227,000 higher than it was a year earlier. The jobless rate dropped to 6.1 percent from 6.2 percent as youth and some older people left the work force.
"There is no question the economy is slowing," said BMO Capital Markets senior economist Michael Gregory.
But he said: "We're nowhere near the 1991 recession... The numbers are so extreme that it leads you to believe that maybe there's some statistical anomalies going on here."
The median estimate by analysts surveyed by Reuters had been for a gain of 5,000 jobs in July following a loss of that magnitude in June.
More than half of the jobs lost, 32,000, were in the factory sector. The province Ontario, Canada's industrial powerhouse, shed 41,000 factory jobs. Manufacturers have been hit hard by the impact of the strong Canadian dollar.
In neighboring Quebec, also heavily industrialized, the unemployment rate rose to 7.4 percent from 7.2 percent.
"I would suggest there is some statistical noise going on here. We had a big boost in manufacturing in May that seemed more fiction than reality, and I think this is that boomlet working its way out of the economy," HSBC Canada market strategist Stewart Hall said.
Statistics Canada does not revise its employment data, so if a survey erroneously captures a jump in jobs, the error may show up as a fall in a later report.
Even combining a few months, however, a pretty picture does not emerge. Statscan has reported a loss of 52,000 jobs from May through July, and 33,000 from April through July.
Canada is being hit by global economic factors beyond the control of any one government, Finance Minister Jim Flaherty said in a statement.
"However, Canada's economic fundamentals remain solid. Canada's labor market has outperformed that of the U.S. since the start of the year, while over 70,000 jobs have been created in Canada, the U.S. has lost over 463,000."
Economists said the figures could give the Bank of Canada pause, perhaps increasing the odds of an interest rate cut as the bank gauges the effects of lower growth on inflation. Continued...
