Canada's jobless rate climbs as jobs lost

By Alexandre Deslongchamps  |   2008-7-12  |     NEWSPAPER EDITION

CANADIAN employers unexpectedly shed jobs in June for the first time this year, pushing the unemployment rate up and showing that the effects of the United States slowdown are spreading through the country's economy.

Employers fired 5,000 workers, Statistics Canada said yesterday, after a gain of 8,400 the month before. The jobless rate rose to 6.2 percent, the highest since April 2007. Economists anticipated 8,000 new jobs and the same jobless rate, according to the median of 23 and 21 estimates in Bloomberg News surveys.

The job loss may complicate the Bank of Canada's interest-rate decision next week, as it tries to contain inflation on one hand and boost growth amid falling exports on the other. Policy makers unexpectedly kept borrowing costs unchanged at 3 percent last month, saying rising prices had become a bigger concern than slower expansion.

The report may force policy makers to "tone down their hawkish tone next week," said Meny Grauman, an economist with CIBC World Markets Inc in Toronto. Still, "inflation is becoming a problem in Canada and the Bank of Canada will have to deal with this and sacrifice a little bit of growth," he said.

Canada's dollar dipped 0.9 percent to C$1.0173 to the US dollar in Toronto yesterday from C$1.0085 on Thursday, the biggest drop since June 30.