Print Story: Canada recovery speed in doubt after jobs data on Yahoo!

Canada News Page 1 of 2

Back to Story - Help

Canada recovery speed in doubt after jobs data

Fri Aug 7, 2:12 PM

By Louise Egan

OTTAWA (Reuters) - Canadian job losses in July were more than double what had been expected,
prompting the finance minister to speak out to try to calm any "euphoria" over an imminent economic
recovery.

Statistics Canada said on Friday the economy suffered net job losses of 44,500 in the month, more than
double the number expected as employers cut workers even though the economy is commonly thought
to be on the mend after its worst recession since the early 1990s.

The construction industry bled the most workers, followed by food and accommodation services, while
factory workers were largely spared.

The unemployment rate remained unchanged from June at an 11-year high of 8.6 percent as fewer
people stayed in the labor market looking for work.

The dismal numbers may push some economists to push back their forecasts of an economic turnaround
this quarter.

"This indicator suggests that economic recovery needs to be pushed off perhaps a little further," said
Eric Lascelles, chief economist at TD Securities.

A separate release showed purchasing activity in the Canadian economy expanded in July for a second
straight month but at a slower pace than expected.

Finance Minister Jim Flaherty, in an interview with CTV television, warned Canadians to expect more
job losses for months to come and said the recession is not over yet.

"It's going to be a difficult year. I've been saying that, I try to calm the euphoria about 'we're out of a
recession'," Flaherty said. [nN07134490]

UPBEAT CENTRAL BANK

The Bank of Canada stirred hopes last month when it predicted the economy would grow in the current
quarter by 1.3 percent, following a deep recession spanning the three previous quarters. [nN23196742]

"This report may cloud their view a bit," said Sal Guatieri, senior economist at BMO Capital Markets in
Toronto.

http://ca.news.yahoo.com/s/reuters/090807/business/cbusiness_us_economy?printer=1 8/8/2009
Print Story: Canada recovery speed in doubt after jobs data on Yahoo! Canada News Page 2 of 2

The central bank has promised to keep its benchmark interest rate at a record low of 0.25 percent
through June 2010, conditional on inflation staying under control.

But if the outlook worsens considerably, the bank could either keep rates on hold for longer or consider
printing money to buy bonds in the market, a step known as quantitative easing.

The Canadian dollar fell to a one-week low against its U.S. counterpart after the report, hitting C$1.0851
to the U.S. dollar, or 92.16 U.S. cents. It later recovered slightly to trade at C$1.0822, or 92.40 U.S.
cents.

The jobs data has become a hot-button political issue for Conservative Prime Minister Stephen Harper
as the opposition Liberals pressure him to improve employment insurance benefits -- an issue that may
be shaping up as the trigger for a federal election in the autumn.

Still, economists pointed to some good signs -- the overall pace of job losses appears to be slowing from
earlier this year and the manufacturing sector carnage is slowing. Also, a lack of summer jobs for
students explained part of July's big rise in unemployment and that trend will be reversed in September.

U.S. employment fared better than expected in July. U.S. employers cut a fewer than expected 247,000
jobs, providing the clearest evidence yet that the economy there is turning around.

(Additional reporting by Toronto Treasury Desk; editing by Peter Galloway)

Copyright © 2009 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly
prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or
for any actions taken in reliance thereon.
Copyright 2009 © Yahoo! Inc. All rights reserved.
Privacy | Terms and Conditions | Send Feedback | Help
ROGERS™, HI-SPEED INTERNET and the other ROGERS and HI-SPEED INTERNET marks are trademarks and/or
registered trademarks of Rogers Communications Inc., used under license. YAHOO! ®, the Yahoo! logos, and other Yahoo!
product and service names are the trademarks and/or registered trademarks of Yahoo! Inc., used under license.

http://ca.news.yahoo.com/s/reuters/090807/business/cbusiness_us_economy?printer=1 8/8/2009