UPDATE 3-Slower Canada growth leads to tepid job gains

* Economy adds 15,200 jobs vs forecast of 18,000 gain

* Jobless rate falls to 7.6 pct as youth drop out

* Details firm view that rates to stay low for now
(Recasts with finance minister’s comment, U.S. comparison)

By Louise Egan

OTTAWA, Dec 3 (BestGrowthStock) – Canadian factory layoffs in
November nearly erased job gains in health care, trade and
other services as an export slump hindered economic growth and
led to a third straight month of disappointing employment
data.

The economy gained 15,200 jobs in November, Statistics
Canada said on Friday, below expectations of an 18,000-job
gain.

The unemployment rate fell to 7.6 percent from 7.9 percent
in October but that was largely due to a large number of youth
dropping out of the job market, Statscan said.

The modest gain followed two months of softer-than-expected
employment with just 3,000 new jobs in October and the loss of
6,600 positions in September.

Unlike the United States, Canada has recovered the jobs
lost during the 2009 recession. However, the pace of employment
has slowed from earlier this year,

“Not only did the headline come in very soft after the
prior month’s softness, but the hours worked grew at an even
weaker pace because all of the job gains were part-time,” said
Derek Holt, economist at Scotia Capital. “That implies less of
a lift to consumer incomes than even the modest gain in jobs.”

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For a graphic on Canadian employment, click here:

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A disappointing U.S. nonfarm payrolls report on Friday
could mean even more bad news for Canada in the form of a
further weakening of demand for Canadian goods from the
country’s top market.

U.S. employment barely grew in November and the jobless
rate unexpectedly hit a seven-month high of 9.8 percent.

“It’s a bit discouraging to see the unemployment numbers in
the United States … there’s a persisting concern with respect
to the American economy,” Finance Minister Jim Flaherty said on
Friday. [ID:nN0399146]

The Canadian dollar, which traded at just below parity with
the U.S. dollar before the data, weakened to C$1.0019, or 99.81
U.S. cents, after the report and slid further after the U.S.
employment report. [ID:nN0380259]

The jobs numbers did little to change expectations that the
Bank of Canada will hold its benchmark interest rate steady at
1 percent on Dec. 7, after hiking it three times earlier this
year.

“This just drives home the point that there’s really no
urgency for the bank to be cranking rates higher,” said Doug
Porter, deputy chief economist at BMO Capital Markets.

“On balance it supports our view that the Bank of Canada is
on an extended pause (on interest rates) straight through to
late 2011,” Holt said.

Forecasters surveyed by Reuters unanimously predict the
bank will stand pat on rates this month, but views differed
widely on the timing of the next increase in 2011.
[ID:nN02264459]

Markets were pricing in a 98 percent probability that the
bank will hold rates steady this month, according to a Reuters
calculation of yields on overnight index swaps. (BOCWATCH: )

SERVICE SECTOR HIRING

The biggest job gains in November were in health care and
social assistance, one of the fastest-growing job sectors in
the past year. Hiring was also strong in wholesale and retail
trade, as well as in accommodation and food services.

Those gains were almost completely offset by a big drop in
factory payrolls and by losses in finance, insurance, real
estate and leasing.

Details of the report pointed to an uneven labor market,
with all the gains in part-time jobs, where growth has far
outpaced that of full-time jobs, and in services industries,
which tend to be lower-paying jobs than in the goods-producing
industries.

The average hourly wage of permanent employees, closely
watched by the Bank of Canada for inflation pressures, slowed
slightly to 2.2 percent in November from a year earlier
compared with a 2.3 percent advance in October.
(Additional reporting by Julia Johnson in Ottawa and John
McCrank and Ka Yan Ng in Toronto; editing by Peter Galloway)

UPDATE 3-Slower Canada growth leads to tepid job gains