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Job seekers look at ads at a jobs fair in Toronto in late March

Fernando Morales/The Globe and Mail

Jobless benefits fell for the first time in nearly a year in July, amid signs the labour market is stabilizing and as some people exhausted their claims.

The number of people claiming employment insurance fell 3.8 per cent in July from a month earlier, Statistics Canada said Monday. It was the first drop in 11 months, with the biggest declines in Ontario, Quebec and Alberta.

Recent labour reports show the torrid pace of layoffs across the country is easing. In the last five months, the economy has shed 31,000 jobs, a far slower pace than the 357,000 jobs lost in the previous five months. A decline in initial and renewal claims also indicates that pressure on the system is subsiding.

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"We are encouraged by this report, and believe that it is a reflection of the improving fortunes in the Canadian labour market," said Millan Mulraine, economics strategist at TD Securities in a note. He cautioned that any jobs recovery will be slow.

Renewal and initial claims fell 8.5 per cent in July, a similar pace of decline to the previous month.

The agency doesn't track why claims rise or fall, and it may be some people's benefits ran out in the month, rendering them ineligible for further funds. Regular benefits tend to expire after about a year.

Vincent Ferrao, analyst for Statscan's labour division, said the decline was likely due to two factors: "some people are going back to work, and some people are exhausting their benefits," he said in an interview. "It's a combination of both."

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 regular 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 due to the expiration of benefits.

Employment insurance has become a central political topic this year. Prime Minister Stephen Harper and his minority Conservatives have proposed legislation to extend coverage, though the bill is still being debated in Parliament.

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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.

For July, nowhere did the number of EI beneficiaries fall the fastest than in Ontario, where the monthly drop was 5.9 per cent or about 17,000 fewer people. From October to June, by contrast, the number of beneficiaries had increased, on average, by about 16,000 a month.

The only province to tally a monthly increase in July was Newfoundland and Labrador, where the number of benefits rose 6.5 per cent.

The Canadian economy shed 45,000 jobs in July and added about 27,000 positions in August. The labour force survey for September will be released on Oct. 9.

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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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