Canada’s unemployment rate edged down to 7.1% in September as the country generated a better-than-expected 43,200 new jobs, Statistics Canada reported today.

Economists had been forecasting job growth of 20,000 or less and didn’t think the jobless rate would budge from August’s 7.2%.

The strong jobs report (along with the weaker-than-expected U.S. employment figures) led to a big gain in the Canadian dollar. The loonie was up 0.68 cents to US79.96¢ in early trading.

BMO Nesbitt Burns senior economist Douglas Porter said the employment report was “likely plenty strong enough to keep the Bank of Canada on its rate-hike program later this month.”

September’s job creation followed two relatively static months of employment.

Statistics Canada said last month’s job growth was entirely in full-time work and said the services sector was especially strong, with a lot of new hiring in education.

So far this year, the number of full-time jobs has grown by 229,000 while part-time jobs have shrunk by 74,000.

Public sector jobs grew by 36,300, due in part to that increase in education employment. “Public sector employment has shown an upward trend since mid-2003 and this month’s increase brings total gains since the start of 2004 to 60,000,” Statistics Canada said.

Factory work remained little changed. An increase of 22,000 manufacturing jobs in Quebec was offset by a loss of 21,000 factory jobs in Ontario. In the last year, Statistics Canada said the number of manufacturing jobs has hardly moved.

The jump in job-creation is being welcomed by economists.

Some said the rop in unemployement will likely help keep the Bank of Canada on track for an interest rate increase later this month.

“The September bounce in jobs breaks a string of three consecutive weaker-than-expected results and will certainly be seen as confirmation that the economic environment in Canada is sound,” said Carl Gomez of RBC Financial Group.

“The Bank of Canada should be very cautious about raising interest rates any further, especially given the recent sharp rise in the exchange rate of the Canadian dollar out of concern for the softness of private-sector employment,” he said.

“Much of September’s bounce reflected a return to a more normal level of employment in the public sector, which had slumped by an unexplained 61,000 positions over the previous two months,” said Derek Burleton, a senior economist with the TD Bank. “In contrast, the number of private-paid positions rose by a moderate 11,000 in September, in keeping with its moderate pace over the past few months.”