UPDATE 3-Election hires boost Canada's October employment

(Adds details, reaction, U.S. jobless figures)

By David Ljunggren

OTTAWA, Nov 7 (Reuters) - Canada's economy unexpectedly added 9,500 jobs in October as the global financial crisis began to bite, but the increase largely reflected a big jump in employment linked to the Oct. 14 federal election.

Statistics Canada said on Friday that the October jobless rate rose to 6.2 percent from 6.1 percent in September, pushed up by more people looking for work. The figure was in line with the expectations of analysts, who also had forecast that the number of jobs would drop by 10,000.

Market operators are predicting that the jobless rate will increase amid the worsening slowdown in the United States, which takes 75 percent of all Canadian imports.

Figures released in Washington on Friday showed the U.S. unemployment rate in October rose to 6.5 percent -- the first time since the early 1980s that the U.S. figure has been higher than in Canada.

Statscan said the economy added 47,500 full-time jobs in October and shed 38,100 part-time posts. It was a far cry from September, which saw the addition of 106,900 jobs.

"It's still good news to see jobs being created, and not destroyed, and especially not to see a huge negative bounce-back after that big gain in the prior month," said Eric Lascelles, chief economics and rates strategist at TD Securities.

Statscan said a 40,000 gain in public administration jobs in October was largely "among occupations related to the election process".

The central statistics agency did not have precise details of how many people had been taken on specifically to work on the national vote, whether they were working full- or part-time or how long they would be in their jobs.

"Even outside of that (the election), there are no serious signs of trauma here, especially considering that this follows a month when we saw jobs post a 107,000 gain, so at least so far, Canada continues to hang in there," said Doug Porter, deputy chief economist at BMO capital markets.

The Canadian dollar moved up to C$1.1915 to the U.S. dollar, or 83.93 U.S. cents, from C$1.1994, or 83.38 U.S. cents, before the data was released.

Employment in the hard-hit manufacturing sector dropped by 8,600 jobs from September. The sector has lost 47,300 positions since October 2007.

The food and accommodation sector lost 27,000 jobs, which Scotia Capital analyst Derek Holt said reflected reduced spending by tourists and the fact that Canadians were cutting discretionary spending.

"The November report will probably swing the headline around once election workers are removed from the number ... So far this year, Canadian employment has behaved in a typical pre-recession manner. We think Canada is now verging upon a negative trend in lost jobs going into 2009," he said.

The average hourly wages of permanent employees rose by 4.2 percent from October 2007, down from the 4.3 percent year-on-year increase that had been recorded in September. (Additional reporting by Ka Yan Ng and John McCrank in Toronto, Editing by Chizu Nomiyama)