Canada Sheds 11,000 Jobs on Record Private-Sector Loss

By Dow Jones Business News, September 05, 2014, 09:55:00 AM EDT

OTTAWA--Canada's job-creation engine stalled in August, led by the biggest decline in private-sector positions on record, signaling that Canadian firms remain cautious on hiring amid general unease about global economic developments.

The disappointing report--including an eye-popping loss of more than 100,000 private-sector jobs--underscored that the trend of employment growth in Canada remains tepid.

It also offered the country's central bank more ammunition to hold onto its neutral policy on interest rates even though other indicators point to building momentum in the Canadian economy.

Employment in Canada declined by a net 11,000 positions in August, Statistics Canada said Friday. Market expectations were for a gain of 10,000 jobs, according to economists at Royal Bank of Canada. The unemployment rate was 7%, unchanged from July and matching expectations, as many Canadians stopped looking for work.

Friday also saw the release of a disappointing jobs report for the U.S., Canada's largest trading partner. Growth in nonfarm payroll employment there fell to its lower level of the year in August, to 142,000. Still, so far in 2014 U.S. employers have added an averaged 215,000 jobs every month, the best pace of job growth since 1999.

A different story has emerged in Canada. In the 12 months to the end of August, Canada added 81,300 jobs, for an average gain of just 6,800 jobs a month.

Other data, including merchandise trade and manufacturing, suggest Canada is beginning to reap the benefits of a faster-growing U.S. and a relatively weaker Canadian currency. Still, Finance Minister Joe Oliver has warned that Canada faces ongoing headwinds, from slower growth in China to stagnation in Europe.

In August, Canada shed 111,800 private-sector jobs. The loss was partly offset by a 14,000 gain in public-sector payrolls, and a surge of 86,900 among the ranks of the self-employed.

"The big issue in Canada is that the private sector is not producing any new jobs," said Douglas Porter, chief economist at BMO Capital Markets.

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Canada Sheds 11,000 Jobs on Record Private-Sector Loss