(Recasts, adds context, economist comment)
By David Ljunggren
OTTAWA Jan 6 Canadian job growth surged in
December as full-time employment finally rebounded, turning
concern about a weak labor market on its head and raising hopes
the economy may have turned the corner after two years of pain
caused by low oil prices.
Employers added 53,700 jobs in December and 214,000 in 2016
as a whole, the best annual growth since 2012, bucking market
expectations for a month without job growth in a year where
part-time and lower-quality jobs dominated employment.
December's gains included a jump of 81,300 full-time jobs,
were in sectors considered high-quality, and came even in
regions where the long slump in oil prices had taken a toll -
all qualities that should reassure the Bank of Canada that the
long economic malaise may be over.
"Certainly the Bank's going to take some comfort from that
... with these employment gains there will be no pressure to cut
rates and we'll see whether this hiring starts encouraging
stronger expenditure," said Paul Ferley, assistant chief
economist at Royal Bank of Canada.
Canada's central bank cut interest rates two times in 2015
in a bid to revive the struggling economy, and has held
borrowing costs steady in 2016 even as its U.S. counterpart, the
Federal Reserve, began what is expected to be a series of rate
hikes to hold U.S. inflation in check as that economy grows.
Signs that Canadian employment is finally turning a corner
boosted the Canadian dollar to C$1.3216 to the U.S.
dollar, or 75.66 U.S. cents. That was up from C$1.3268, or 75.37
U.S. cents, before the report's release.
The jobs report was accompanied by separate trade data
showing the first trade surplus in more than two years in
November, suggesting exports are finally picking up steam as the
U.S. economy strengthens.
Canada's central bank has been hoping the manufacturing and
export sector can help take up the slack from a cooling housing
market, one of the few recent areas of strength, as the nation
waits for the energy sector to recover.
Economists said the surprisingly strong employment and
export data should bolster broader economic growth in 2017, but
the jobs data in particular is notoriously volatile, and signs
of slack in the labour market remain.
"While economic growth is expected to pick up, that's not to
say employment gains will be stellar in 2017. Canadian firms may
want to limit costs as to restore profit margins after two
difficult years," said Krishen Rangasamy, senior economist at
National Bank Financial.
The gain in jobs at a time the economy is growing only
slowly also suggests productivity is lagging, a demographic
challenge faced by many Western nations with aging workforces
and employers skittish about capital investment.
"Even allowing for the surge in exports in November, the
decline in October monthly GDP suggests that fourth-quarter GDP
growth was no more than 1 percent annualised. If both are
correct, that must mean Canada is experiencing a big slump in
productivity," said Paul Ashworth, chief North American
economist at Capital Economics.
(Additional reporting by Solarina Ho, Matt Scuffham and Susan
Taylor in Toronto and Andrea Hopkins in Ottawa; Editing by
Jeffrey Benkoe and Paul Simao)