Source: The Canadian Press<

Canada’s braking economy is hitting Canadians where it hurts most — in their ability to find work.

The latest jobs data from Statistics Canada found there were 6,600 fewer Canadians working in September, the second time in three months the economy has actually dumped workers after robust growth in the first half of the year.

The unemployment rate surprisingly edged down one-tenth of a point to 8%, but that was because more people — particularly younger Canadians — gave up on finding work rather than a indication of an improvement in the labour market.

“The labour market boom is over,” said CIBC economist Krishen Rangasamy.

“If you look at the last three months, there’s definitely a trend. And if you look at what we’re interested in, the private sector and full-time hiring, both categories are actually down,” Rangasamy said, noting that full-time employment has declined by about 20,000 in the period and private sector hiring by 40,000.

The prognosis for the next few months is not encouraging, with governments scaling back on stimulus, and the housing sector, which supports the important construction industry, retreating.

One hoped-for area of relief, exports, got no encouragement as the U.S. reported employment dipped by a worse than expected 94,000 jobs, mostly because governments were laying off workers last month.

With U.S. households under pressure, analysts say there is little prospect for the kind of renewed demand for products that could trigger a revival in Canada’s factory sector or lumber mills.

“Renewed solid job gains will be tough to come by in the months ahead amid the lacklustre pace of underlying growth that has spilled over from the U.S. into Canada,” said Douglas Porter, deputy chief economist with BMO Capital Markets.

The Canadian Chamber of Commerce urged the government to make private sector job creation a top priority, although the group offered few prescriptions other than asking it to ensure corporate tax cuts continue.

While the job loss was small, it falls in line with the recent downward drift in economic data after a fast start that supported job gains averaging 50,000 a month in the first half of the year.

In the past three months, that pace has slowed to under 7,000 a month, about half the rate analysts say is needed just to keep up with population growth and young entrants to the labour market.

Youth, those between 15 and 24 years of age, were the most noticeable victims of the slowdown in September, with employment in this category falling by 41,900, with much of the contraction in Ontario.

Ontario also took the biggest hit overall, dropping about 23,000 jobs, all in the services sector.

Analysts took some solace from improvements in a few of the underlying details in the jobs report. Hours worked were up in the month, and the number of full-time jobs registered a solid gain of 37,100, offsetting a loss of 43,700 part-time jobs. As well, payroll employment rose, while self-employment declined.

“With gains in actual hours worked and full-time positions registered in the month, the September report was somewhat better than that implied by the decline in the headline job count,” said TD Bank’s Derek Burleton.

Also better than expected was the Bank of Canada’s business outlook survey, released Friday, which found firms relatively upbeat about 2011, with many set to start investing again.

“Responses to the autumn survey suggest that economic recovery is progressing,” if slowly, the bank said.

Hiring intentions were muted, but the bank highlighted that 46% of firms surveyed said they were preparing to increase purchases in machinery and equipment to improve productivity.

That has been a key talking point of central bank governor Mark Carney the past year, stressing better productivity as a necessary condition for economic strength in the future.

Despite the relatively upbeat nature of the survey, Rangasamy said the jobs report all but certainly will compel Carney to take a pause on interest rates increases later this month. After three separate hikes that took the policy rate to 1%, the central bank may stay on the sidelines now until spring.

“Inflation and growth have been below their estimates, and now you have employment showing sings of serious deceleration,” he said. “Putting it together, it’s hard to justify a rate hike in October.”

By industry, manufacturing and construction registered minute gains in employment, while transportation and warehousing picked up 15,000 jobs. Employment in professional, scientific and technical services fell by about 32,000.

Ontario, New Brunswick, Saskatchewan and Prince Edward Island all saw statistically significant job losses in September. Quebec, however, saw employment rise by 15,200 and its jobless rate fall half-a-point to 7.7. Newfoundland’s jobless rate also dipped half-a-point to 13.5, as the province gained 4,900 jobs.