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Canadian dollar tumbles on 'squishy soft' jobs report

These are stories Report on Business is following Friday, July 11, 2014.

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Loonie sinks on jobs report
Today's sour jobs report took its toll on the Canadian dollar, sending the currency sharply lower.

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The loonie, as Canada's dollar coin is known, was at about 94 cents U.S. before Statistics Canada released its latest reading of the labour market, which showed a loss of 9,400 jobs in June and the unemployment rate inching up to 7.1 per cent.

By late in the day, the loonie had eroded to 93.17 cents.

Today's report is seen as holding the Bank of Canada in a "dovish" stance, and thus the pressure on the currency.

"The Canadian job market remains mired deep in a mid-cycle funk, with precious little employment growth over the past year," said chief economist Douglas Porter of BMO Nesbitt Burns.

"While there is much sound and fury surrounding monthly Canadian job tallies, often signifying very little, the underlying trend is unquestionably squishy soft," he added in a research note.

"Simply, this gives the Bank of Canada all the justification it needs to still sound quite dovish in next week's interest rate decision and quarterly Monetary Policy Report, even with the recent uptick in prices. Their focus will likely shift from 'too-low inflation' to 'too-low growth.'"

Canada loses jobs
This morning's report showed Canada's labour market is limping badly, with the slowest annual employment growth in more than four years.

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Still, buried beneath the headlines was some good news: Employers added 33,500 full-time jobs in June, though that was eclipsed by the loss of 43,000 part-time positions. And over the course of the year, all job gains have been in the private sector.

The country's labour market has been limping for some time now, with job-creation over the past year of just 72,000, or 0.4 per cent.

"This was the lowest year-over-year growth rate since February 2010, when year-over-year employment growth resumed following the 2008-2009 labour market downturn," the federal statistics agency said.

Ontario, which lost 34,000 jobs last month, was a sore spot in the report, adding to the pressure on the recently re-elected government of Liberal Premier Kathleen Wynne. Factory employment in the province is now the lowest on record.

"Gains in the West were more than offset by the sharp decline in Ontario, the latter province's employment now about the same as at the start of the year," noted Mr. Rangasamy.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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