OTTAWA – The Canadian economy lost a surprising 45,900 jobs in December to finish the weakest year of job growth since 2009, raising concerns about how the economy will fare into 2014.
The unemployment rate rose to 7.2 per cent in the final month of the year, compared with 6.9 per cent in November.
BMO Capital Markets chief economist Doug Porter said the dismal jobs data will add pressure on the loonie and stoke chatter about the possibility of a interest rate cut by the Bank of Canada.
The loonie fell 0.42 of a cent to 91.73 cents US after earlier having dipped to 91.36 cents US, its lowest level since September 2009.
Bank of Canada governor Stephen Poloz has suggested that the central bank’s next policy move is just as likely to be a cut in interest rates as a hike.
However, Porter suggested Friday that it will likely take more than one month of disappointing job growth to trigger a rate cut.
“We continue to believe the bank will need to see an extended period of economic underperformance and even lower inflation before they would even consider easing,” Porter said.
The December drop, the biggest in one month since March 2013, was led by a decline in full-time jobs, which fell by roughly 60,000, offset by a gain of 14,200 part-time jobs.
Economists had expected the economy to add 14,600 jobs and the unemployment rate to hold steady at 6.9 per cent, according to estimates compiled by Thomson Reuters.
The weaker than expected report in Canada came as the United States also released disappointing job growth numbers.
The country’s biggest trading partner added just 74,000 jobs in December after averaging 214,000 in the previous four months. The U.S. Labor Department also said Friday that the unemployment rate fell to 6.7 per cent from seven per cent in November as many Americans stopped looking for work.
The December jobs report capped a week of generally soft Canadian economic data. Statistics Canada reported earlier this week that Canada’s trade deficit edged higher in November as imports inched up and exports stalled.
Industry Minister James Moore said the jobs report was disappointing, but the government was focused on the bigger picture.
“I think if you step back and look at the overall jobs picture, we still have the strongest job record in all the G7,” Moore said in Vancouver.
“The overall picture for the Canadian economy is still very strong. The jobs picture overall for the Canadian economy is still strong.”
CIBC chief economist Avery Shenfeld noted the jobs numbers are volatile month to month, but said the December results were decidedly ugly.
“We are getting less surprised by surprises in this survey, which has had quite a lot of volatility in the past year or so, but obviously it is a disappointment in both Canada and the U.S.,” Shenfeld said.
However, Shenfeld noted that the fourth quarter started out with a fair bit of momentum.
“Because we got off to a good start, the fourth quarter still looks reasonably healthy and so the issue really is: Do we get a bounce back in January and February to help the first-quarter numbers?”
The drop in the overall number of jobs follows moves by several big companies to cut their workforces late last year.
Smartphone maker BlackBerry, for example, has been shedding jobs following an announcement in September that it would cut its workforce by 40 per cent or about 4,500 people.
Retailer Sears Canada also announced plans in late November to cut 800 employees across its operations, while Potash Corp. of Saskatchewan said in early December it would cut 1,045 in Saskatchewan, as well as New Brunswick and Florida.
For the month, Ontario and Alberta led the provinces lower with losses of 39,000 and 12,000 respectively. British Columbia added 13,000 jobs and Newfoundland and Labrador gained 1,900.
By industry, there were 19,000 fewer jobs in educational services, while the other services category, which includes personal care as well as civic and social organizations, lost 15,000. The agriculture sector lost 9,800 and natural resources lost 8,000.
Health care and social assistance were the only areas to see gains in December as the sector added 22,000 jobs.