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The Globe and Mail

Canada sees biggest jobs decline in half a year

Dozens line up to register for the The National Job Fair & Training Expo at the Metro Toronto Convention Centre, 2012.

J.P. MOCZULSKI/The Globe and Mail

Canadian employers shed 21,900 jobs last month, the first decline in half a year, as schools and factories reduced headcount.

Despite the drop, the country's jobless rate ebbed to 7 per cent in January from 7.1 per cent as fewer people looked for work, Statistics Canada said Friday.

Job growth had been robust in recent months, strength that seemed at odds with other data that showed a clear slowdown in the economy. The latest report shows employment levels are now starting to reflect that soft patch, economists said.

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"That the labour market continued to power along when the economy was growing at a less than 1-per-cent pace in the second half of 2012 seemed out of whack," said Dawn Desjardins, assistant chief economist at RBC, in a note.

While January's report was "disappointing," she sees the jobless rate gradually easing to 6.7 per cent by the end of next year, helped by an improving global economy.

For the near term, separate reports out Friday showed softer-than-expected housing starts and a weakening trade picture, more evidence of a tepid economy.

The Canadian dollar fell after the reports, trading just below parity.

Last month's larger-than-expected employment drop came as the public sector eliminated 27,000 positions. The number of private-sector workers also eased in the month while self-employment rose.

In the private sector, Sears Canada, Best Buy, Talisman and Cirque de Soleil have all announced job cuts in recent weeks.

As the federal government prepares its upcoming budget, some say it should ramp up spending on infrastructure projects, in part to bolster employment.

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"As federal and provincial governments formulate their budgets, they should invest more in public services and infrastructure to support employment," said Erin Weir, economist and president of the Progressive Economics Forum, in a note.

Among sectors, education and manufacturing led the decline, falling by 30,900 and 21,600 respectively. Factory employment is now at similar levels to a year earlier, the agency said.

Construction companies added to payrolls and so did public administration.

Employment fell in Ontario and British Columbia last month, and among men between the ages of 25 and 54. Older men and youth saw jobs gains.

Job levels are still higher than a year ago. Employment has grown 1.6 per cent from last year, all in full-time positions, Statscan said.

Economists had expected 5,000 new jobs with the jobless rate rising a notch to 7.2 per cent.

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About the Author

Tavia Grant has worked at The Globe and Mail since early 2005, covering topics from employment and currency markets to trade, microfinance and Latin American economies. She previously worked for Bloomberg News in Toronto and Zurich, writing on mining, stocks, currencies and secret Swiss bank accounts. More

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