(Updates with bankers acceptance trading in eighth paragraph, productivity report in last paragraph.)
June 10 (Bloomberg) -- Canada’s jobless rate unexpectedly declined in May to the lowest since January 2009 as the economy added workers for the seventh time in eight months.
The unemployment rate fell to 7.4 percent last month from April’s 7.6 percent, Statistics Canada said today in Ottawa, as employment rose by 22,300. Economists forecast 20,000 new jobs and no change in the jobless rate, according to the median estimates in Bloomberg surveys.
Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney have said they are relying on business spending to drive the economy as government stimulus winds down after the recession. The Bank of Canada says growth is likely to slow to a 2 percent annual pace in the April-June period after a 3.9 percent first-quarter rate, and policy makers said May 31 they will raise the benchmark interest rate from 1 percent “eventually” with the economy reaching full output next year.
“The drop in the unemployment rate helps consumer confidence,” said Jonathan Basile, a senior economist at Credit Suisse in New York, by telephone. “It’s good to see the private sector add” jobs as well, he said.
Employment at private companies grew by 37,100 and public- sector employment declined by 44,300, the statistics agency said.
GlaxoSmithKline Plc will create 70 new jobs in Ontario as it expands a factory in Mississauga, the provincial government said yesterday.
The Canadian dollar recovered losses after the report. The currency traded for 97.25 cents versus the U.S. currency at 9:31 a.m. in Toronto from 97.30 cents late yesterday, after trading as weak as 97.63 cents. One Canadian dollar buys $1.02785.
The yield on the December bankers acceptance contract, a barometer for short-term rate expectations, rose to 1.49 percent from 1.48 percent yesterday. It has fallen from a peak of 1.99 percent on April 11 as investors scaled back bets on a Bank of Canada rate increase.
The report compares with the U.S., where the Labor Department said June 3 from Washington that the jobless rate unexpectedly rose to 9.1 percent as payrolls grew at the slowest rate in eight months, showing employers are losing confidence as the world’s largest economy slows.
“Our economy has one of the best records in the area of job creation in comparison with other industrialized countries and this is why we will continue to keep our taxes low,” Prime Minister Stephen Harper told lawmakers on June 8. His Conservative Party was elected May 2 with a majority in the House of Commons after campaigning on a message of economic stability.
Full-time work increased by 32,900 in May and part-time work fell by 10,600, Statistics Canada said today. Self- employment increased by 29,500, while paid employment fell by 7,300.
By industry, retail and wholesale companies led the increase with 34,400 new jobs in May.
Education employment fell by 26,800 and manufacturing declined by 22,500, Statistics Canada said.
“On balance, the details are softer than the headline,” said Derek Holt, vice president of economics at Bank of Nova Scotia’s Scotia Capital unit in Toronto. “The qualities of jobs created here are softer than what one may think.”
Average hourly wages rose 2 percent in May from a year ago, compared with a 2.5 percent pace in April. “What matters to the Bank of Canada the most is wage growth decelerated,” Holt said.
Statistics Canada said in a separate report today that labor productivity rose 0.4 percent between January and March, less than half the pace forecast by economists, as much of the country’s output growth in the first quarter came from an increase in hours worked.
--With assistance from Ilan Kolet in Ottawa. Editors: Paul Badertscher, Theophilos Argitis
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