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A two-month dip in new claims for unemployment benefits is raising hopes that the Canadian job market is stabilizing.

After months of deep layoffs, initial and renewal employment insurance claims tumbled 8.5 per cent in July, with Ontario and British Columbia leading the decline, Statistics Canada said yesterday.

Companies have yet to start hiring in droves, but at least the torrid pace of layoffs is easing. The economy lost far fewer jobs in recent months than during the start to the year. And in August, employers actually added to payrolls. July marked the fourth time in five monthsthat new EI claims decreased.

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"The numbers may be telling us the unemployment rate is likely to peak fairly soon, maybe sooner than we anticipated," said Sal Guatieri, a senior economist with BMO Nesbitt Burns, whose current forecast is for the jobless rate to peak at 9.3 per cent early next year.

Recruiters are also noticing some improvements. "Across Canada we're seeing clients who are now hiring to fill vacancies that have been left open for many months during the depths of the recession," said Jeff Aplin, executive vice-president of David Aplin Recruiting in Calgary.

In Toronto, "most companies we work with have already downsized, and in fact some have overdownsized," said Rick Chad, president of recruiting firm Chad Management Group, who is seeing hiring pick up in the telecommunication and technology sectors.

Still, an overall decline in the number of people collecting jobless benefits, the first in 11 months, is also a sign that some unemployed workers are exhausting their benefits.

The number of people receiving regular claims fell 3.8 per cent in July, a drop Statscan attributed to both an improved labour market and that EI benefits expired for some people.

"Some people are going back to work, and some people are exhausting their benefits," said Vincent Ferrao, an analyst for Statscan's labour division. "It's a combination of both."

The duration of EI benefits varies widely. In Quebec City and Regina, for example, payouts can be as short as 19 weeks. In Charlottetown and Windsor, Ont., by contrast, benefits last as long as 50 weeks.

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The number of regular EI recipients remains elevated. Despite July's drop, the number of people getting benefits remains 57.4 per cent higher than it was last October when the job market peaked. More than three-quarters of a million Canadians - or 787,700 people - received benefits in July.

Fewer than half of unemployed workers are actually receiving benefits, noted Erin Weir, economist at the United Steelworkers who believes the drop is more likely a result of the expiration of benefits.

Over the past year, the biggest increases in beneficiaries are in Calgary, Edmonton, Greater Sudbury and Vancouver. In Calgary, the number of EI claimants has more than quadrupled; in Edmonton, it has more than tripled amid job losses in factories, construction, retail as well as in the oil and gas sector.

The latest report shows that young people and men continue to be the hardest-hit segments of the work force. More than twice as many young men were on EI this summer than last summer.

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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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