OTTAWA — Signs that Canada's economy is beginning to pick up following a sluggish start to the year grew brighter Friday as Statistics Canada said the country added 12,000 jobs in August.
With more people entering the labour force and looking for work, the unemployment rate ticked up to 7.0 per cent from 6.8 per cent, where it had held steady for six months.
Nonetheless the numbers were considered positive given economists had expected the economy to lose 4,500 jobs in August, and for the unemployment rate to remain at 6.8 per cent, according to Thomson Reuters.
The results follow stronger-than-expected trade data this week, and a report that found while Canada's economy contracted in the second quarter, there was solid growth in June that exceeded expectations.
"We saw many economic releases out of Canada this week and I would say generally they came in on the positive side of the ledger," Bank of Montreal chief economist Doug Porter said. "If you add them up, it does suggest that the economy saw some decent growth in the third quarter after that struggle through the first half of the year."
Porter noted the increase in the unemployment rate is a bit of a mixed signal.
"Generally it is encouraging to have more people coming into the labour force, thinking that conditions have improved," he said.
"A year ago we were at seven per cent, today we are at seven per cent. So effectively the economy has managed to produce just enough jobs to satisfy the growth in population over the past year."
The overall increase in the number of jobs in August came as the number of full-time jobs grew by 54,400, offset in part by a drop of 42,400 part-time jobs.
Public administration employment increased by 14,000 in August, while educational services gained 11,100 jobs.
However, TD Bank economist Leslie Preston noted that more cyclical industries like construction and manufacturing shed jobs for the month.
Construction lost 3,600 jobs, while manufacturing fell by 3,200 jobs.
"While it is good news that hiring in sectors like public administration and educational services are offsetting these losses for the time being, these gains are unlikely to be sustained, and we do expect hiring overall in Canada's economy to slow through the remainder of 2015," she said.
The Bank of Canada has cut its key interest rate twice this year in an effort to provide a cushion for the economy, which has been hit hard by the slump in oil prices that began last year.
Preston said the central bank is expected to sit tight with its overnight rate target set at 0.5 per cent as the economy is expected to return to growth in the third quarter. The bank announces its benchmark rate on Wednesday.
The job report Friday said Saskatchewan led the way in August as it added 4,000 jobs, while Newfoundland and Labrador added 3,100. Manitoba added 2,700 and New Brunswick increased by 2,400. There was little change in the other provinces, Statistics Canada said.
Overall public sector employment gained 27,200 for the month, while the private sector gained 6,300 jobs. The number of self-employed workers dropped by 21,600.
Statistics Canada also reported Friday that the unemployment rate for students aged 15-24 over the summer months from May to August was 16.8 per cent, similar to where it was during the same time last year.
That compared with an unemployment rate of 10.3 per cent for non-students in the same age category.
In a separate report, Statistics Canada reported labour productivity of businesses slipped 0.6 per cent in the second quarter following a 0.5 per cent decrease in the first quarter.
The agency said output of businesses decreased at a similar rate to the first quarter, while hours worked continued to increase.
