Source: The Canadian Press

Canada’s unemployment rate rose to over 8% in August, adding new evidence the slowing economy is taking a toll on the country’s previously buoyant labour market.

Statistics Canada said the jobless rate increased one-tenth of a point to 8.1% even though the economy actually created 35,800 net new jobs during the month.

But the gain in the number of jobs was overshadowed by the fact than even more Canadians were actively looking for work in August than a month earlier.

This is the first time the unemployment rate has been above 8% since May, and the report was even weaker than the headline numbers suggest.

Economists had warned the jobs number should carry a caveat, since it was expected that the outsized 65,000 contract educational workers that were reported as out-of-work in July would be re-hired in August.

And in fact, that is what happened with the sector picking up 68,000. Discounting the seasonal variation in the sector would mean the economy actually shed jobs last month.

“With this gain, employment in this industry is back to levels observed during the first six months of the year,” the agency said, noting similar volatility had occurred in past summers.

In an additional note, the agency said averaging out July and August shows the labour market is slowing noticeably with an average pick-up of 13,000 jobs during the summer months, compared to 51,000 for the first six months of the year.

The summer of 2010 was also a difficult time for students searching for work. The category averaged a 16.8% unemployment rate from May to August, better than during last year’s recession, but about three points worse than in 2008.

Still, the agency said with the new gains, Canada has recouped all of the jobs lost during the 2008-2009 slump, although the unemployment rate remains about two points higher and the number officially unemployed remains about 300,000 above pre-recession levels.

Since last July, the post-recession economy has increased by 430,000 jobs, of which about two-thirds represents part-time.

In August, there were 80,000 full-time jobs created, while part-time work declined by 44,000. However, most of the gains came in the public sector or in self-employment, while the key private sector shed 40,000 employees.

The agency said Quebec, Saskatchewan and Newfoundland had the biggest pick-ups, whereas there was little change in other provinces.

Gains were recorded in construction, professional, scientific and technical services, and in natural services. The battered manufacturing sector continued to struggle, however, giving up 26,000 workers.