More Jobs and Lower Unemployment

Canada added 11,900 jobs in September and the unemployment rate dropped to an almost five-year low of 6.9 percent, largely because fewer youths were looking for work, Statistics Canada said on Friday.

While September's report shows that Canada had largely regained jobs lost during the 2008-09 recession, there is little sign that resurgent growth is in the offing and thus little likelihood that the Bank of Canada will be impelled to tighten interest rates soon.

Doug Porter, chief economist at BMO Capital Markets, said the report was respectable.

"Definitely the eye-popping statistic here was the fact that the jobless rate has dropped below seven percent, gripping the six percent handle for the first time in almost five years. That's always an encouraging sign," he told Reuters.

The gain was greater than the 10,000 new jobs predicted by market analysts. The jobless rate, which stood at 7.1 percent in August, touched the lowest since the 6.8 percent recorded in December 2008.

The average monthly job growth over six months, seen as a more reliable gage of the trend in the job market, was 23,100 compared with 12,300 in the previous six-month period. March's heavy job losses of 54,500 are no longer a part of the most recent six months.

The Canadian dollar firmed to C$1.0376 versus the U.S. dollar, or 96.38 U.S. cents, stronger than just prior to the data's release and stronger than Thursday's North American finish at C$1.0396, or 96.19 U.S. cents.

In September, Canada added 23,400 full-time jobs and lost 11,500 part-time jobs. Since September 2012, the economy has added 212,400 positions, an increase of 1.2 percent.

Finance Minister Jim Flaherty on Thursday said the Canadian economy was growing at what he called a modest rate.

The jobs report suggests there is still plenty of slack in the economy and is unlikely to put any pressure on the Bank of Canada to raise rates soon. It has held its key rate at a near record low of 1 percent since September 2010.

"Given indications that the bank is probably lowering its outlook for growth over the second half of the year it's not the kind of environment where it sounds like the bank will contemplate any near-term move on rates," said Paul Ferley, assistant chief economist at the Royal Bank of Canada.

Canada's economy has recovered the jobs lost during the 2008-09 recession but the jobless rate has yet to fall to pre-crisis levels. During most of 2008 the unemployment rate sat at between 5.9 percent and 6.1 percent.

Employment in the hard-hit manufacturing sector dropped by 26,000 jobs in September. Finance, insurance, real estate and leasing added 33,200 jobs.

Wage growth for permanent employees, closely watched by the central bank, was 1.8 percent in September compared with a year earlier, up from 1.5 percent in August.

By David Ljunggren OTTAWA (Reuters)