Canada's economy created more jobs than expected in December after three months of disappointing employment numbers, coinciding with signs of momentum in U.S. hiring.
Some 22,000 more Canadians were working in December than in November primarily because of a surge in manufacturing jobs. The unemployment rate held steady at 7.6%, according to Statistics Canada's labour force survey released on Friday.
Markets expected 17,500 positions to be created in the month and the jobless rate to tick higher to 7.7%.
The jobs data are probably not strong enough to persuade the Bank of Canada to hike interest rates this month, as there are still signs that the economic recovery has lost some of its shine. But it could mean its next hike will come sooner than previously expected.
The central bank hiked its target lending rate three times last year to 1% but has been on pause since September.
The Canadian dollar firmed after the data to a session high of $0.9942 to the U.S. dollar, or $1.0058, compared with $0.9964 to the U.S. dollar, or $1.0036 prior to the release.
Some of the report's details suggested underlying strength in the economy, with the private sector accounting for the vast majority of jobs filled in the month and the number of full-time positions eclipsing part-time ones.
The data followed weaker-than-expected job growth in November and October and net job losses in September.
Statscan said the economy has added 369,000 jobs during all of 2010, an employment increase of 2.2% and comparable to pre-crisis growth of 2.1% in 2007. Canada has more than recouped all the jobs lost during the 2009 recession.
The job recovery in Canada was much faster than in the United States and the jobless rate has been considerably lower, an historical anomaly. Still, the pace of growth has slowed considerably in recent months while recent U.S. employment data suggests it may soon start catching up.
In Canada, the manufacturing sector led hiring in December, more than offsetting jobs lost in the previous month. Doug Porter, deputy chief economist at BMO Capital Markets called the manufacturing data "a real bright spot."
The transportation and warehousing and natural resources industries also recorded gains, while the construction industry had its first notable employment decline since July 2009.
The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressure, sped up slightly to 2.3% in December from a year earlier and from 2.2% in November.
