Canada economy adds jobs in April but factories hit
By David Ljunggren

Fri May 6, 7:52 AM ET



OTTAWA (Reuters) - Canada\'s economy created 29,300 jobs in April, almost twice the number expected, but the figure was overshadowed by further heavy losses in a manufacturing sector hit by the high Canadian dollar and cheap imports.

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Statistics Canada said on Friday that modest job growth meant the unemployment rate in April fell to 6.8 percent from 6.9 percent, its lowest level since December 2000. Analysts had forecast the rate would stay unchanged at 6.9 percent and that 15,000 jobs would be added.



The Canadian dollar hit a 10-day high on the strong headline figures while bond prices were down.



Statscan said the number of factory jobs dropped by 29,400 in April, bringing the sector\'s losses to 72,200 jobs since April 2004. It was the single largest monthly loss of manufacturing jobs since November 2001, when 34,200 positions vanished.



\"In the April Business Conditions Survey, manufacturers identified a number of impediments to production, including the high value of the Canadian dollar and inexpensive foreign imports,\" Statscan said in its daily bulletin.



Analysts said the figures were not as good as they looked but the drop in the jobless rate could influence the Bank of Canada as it decides whether to raise interest rates, which have been on hold since last October.



\"It\'s a pretty mixed and messy report. It\'s strong on the surface, not quite as strong underneath,\" said Marc Levesque, chief fixed income strategist at TD Securities.



\"I think the fact that the unemployment rate dropped will not be lost on (the Bank of Canada). It suggests the labor market has tightened.\"



The bank left its benchmark overnight rate unchanged at 2.5 percent last month but made it clear that interest rates would rise over the coming 1-1/2 years as the economy approached full capacity. The bank announces its next rate decision on May 25.



David Ebata, managing analyst at Thomson IFR in Boston, said the political uncertainty in Ottawa over whether the minority Liberal government would survive meant the bank required plenty of reasons to raise rates in the current atmosphere.



\"The bank is going to need the dual number of higher inflation and higher employment to have the excuse to move. I think inflation will continue to be the number one factor driving interest rates in Canada,\" he said.



Statscan said the construction sector added 25,600 jobs in April and has grown by 9.3 percent since April 2004.



So far in 2005 overall employment growth has been due to self-employment and public sector employment while the number of private sector employees has fallen.



(Additional reporting by Ka Yan Ng in Toronto)