Following seven consecutive months of increases, employment edged down in December by 19,000, Statistics Canada reported today.

The jobless rate in December held steady at 5.9%.

The Canadian dollar fell almost US1.5¢ at one point this morning after report’s release.

The loonie sank to US97.84¢ before recovering slightly to US98.06¢, down more than a penny from Thursday’s close above US99¢.

Today’s report was much weaker than analysts were expecting. The consensus had been that the country would add about 15,000 jobs.

The weaker jobs report paves the way for an interest rate cut by the Bank of Canada on January 22.

The main reason for the weakness was manufacturing. StatsCan said 32,200 more factory jobs disappeared last month, bringing 2007 losses in the sector to 132,000. Since November 2002, 348,000 factory jobs have gone.

For the year, the Canadian economy created 370,000 jobs, the 15th consecutive year of employment growth.

The 2.2% increase in the number of jobs from 2006 easily beat the 0.2% rise in the U.S.

But Statistics Canada noted that only 47,000 of 2007’s new jobs came in the private sector. The public sector was responsible for more than 208,000 new jobs. Self-employment accounted for the rest. Last month, 51,000 private sector jobs vanished.

Six of the 10 provinces lost jobs in December, led by the manufacturing heartlands of Ontario and Quebec. Alberta gained 20,900 jobs and again recorded the lowest unemployment rate in the country at 3.2% — a drop of 4/10ths of a percentage point from November.