Canada's fiery job market showed no sign of cooling in August and wage hikes outpaced inflation, adding pressure to the Bank of Canada as it mulls how long to hold interest rates steady amid the credit market woes.
The economy added 23,300 jobs and the unemployment rate stayed at a 33-year low of 6.0 percent as more people entered the labour force, Statistics Canada said on Friday. Analysts in a Reuters poll had forecast, on average, an additional 18,000 jobs and a 6.0 percent jobless rate.
"Overall I think it continues to show that Canada's labour market is quite tight," said Doug Porter, deputy chief economist at BMO Capital Markets. "If there is anything the Bank of Canada might be alert for down the road it's the steady upward pressure on labour costs."
The Canadian dollar rose to C$1.0487 to the US dollar, or 95.36 US cents, from pre-data levels of around C$1.0513 to the US dollar, or 95.12 US cents. Hourly wage growth in the year to August hit 4.0 percent, the highest since May 2001. Hourly wages of permanent employees jumped 3.8 percent in the same period.
The report is the first piece of Canadian economic data for August, when credit markets began to experience serious liquidity problems stemming from the US subprime mortgage meltdown. But unlike in the United States, few Canadians expected the pain to show in the jobs report, at least not yet.
Despite the glowing Canadian jobs numbers, there were signs of weakness below the surface. Only 6,500 of the 32,300 jobs added were full-time. Manufacturers, highly sensitive to any troubles in the US economy, shed 3,200 workers and the trade industry lost a similar number.