(Adds details, economist quotes, market reaction, byline)
By Leah Schnurr
OTTAWA, Sept 9 Canada created more jobs than
expected in August on increased hiring in the construction and
services sectors, but the gains did not fully make up for recent
declines in employment, pointing to a labor market that was
struggling to gain momentum.
Canada added 26,200 jobs in August, Statistics Canada said
on Friday, following two months of declines. The unemployment
rate rose to 7.0 percent as more people were looking for work.
Economists were encouraged by the 52,000 gain in full-time
work, but noted the report could be volatile month-to-month.
Compared to a year ago, employment was up just 0.4 percent.
"It's still been a really challenging year for the job
market," said Doug Porter, chief economist at Bank of Montreal.
"We're still seeing just modest job growth over the past
The economy shrank in the second quarter, hurt by the impact
of wildfires in Alberta, but analysts expect to see a recovery
in the third quarter.
The Bank of Canada earlier this week said it still expects
growth to rebound in the second half of the year, but warned the
economy could be weaker than it had anticipated.
The central bank is expected to hold interest rates steady
until 2018, though a minority in the market are betting on an
interest rate cut.
While August's increase in full-time work will likely
provide solace for the central bank, the overall increase in
employment did not fully offset July's sizeable decline, noted
Paul Ferley, assistant chief economist at Royal Bank of Canada.
"The bank will take some encouragement from the report but I
think it will still remain cautious about the Canadian economy,
the tone that was reflected in this week's policy statement,"
The Canadian dollar extended its weakness against the
greenback following the report.
The goods producing segment of the economy also fared well,
with construction jobs up 7,400. The natural resources sector,
which has been hit by job losses due to the slump in oil prices,
added 4,400 new positions, though employment is still down more
than 11 percent from last August.
(Additional reporting by Ethan Lou and Matt Scuffham in
Toronto; Editing by Bernadette Baum)