WRAPUP 1-Canada adds jobs in August, but unemployment rate rises

By Leah Schnurr
OTTAWA, Sept 4 (Reuters) - Canada unexpectedly added jobs in
August, but the unemployment rate rose to a one-year high as
more people looked for work.
Friday's report from Statistics Canada did not change
expectations that the Bank of Canada would hold rates steady
when it meets next week after cutting them twice this year to
try to revive the stalled economy.
The oil-exporting country fell into a modest recession in
the first half of the year as it contended with the plunge in
crude prices, but many economists and the Bank of Canada expect
growth to perk up in the latter half of 2015.
Canada added 12,000 jobs last month. That surpassed
economists' expectations for a decline of 4,500 jobs.
The unemployment rate rose to 7 percent after sitting at 6.8
percent for six consecutive months.
That was the highest level since it was at 7 percent in
August 2014. The participation rate edged up to 65.9 percent
from 65.7 percent.
"Overall, I think there's good news here that will offset
the rise in the unemployment rate," BMO Capital Markets chief
economist Doug Porter said, pointing to encouraging gains in
full-time work.
"This is just another suggestion that the bank is likely to
remain on hold," Porter said. "Things aren't weak enough to
point to another rate cut by the Bank of Canada."
The job gains came entirely from full-time employment, with
54,400 positions added. The educational services and public
administration sectors led the increases.
Some 42,400 part-time jobs were lost.
The natural resources sector, which has suffered from the
downturn in oil, added a modest 2,300 jobs. In Alberta, where
the country's vast oil sands are located, 4,700 jobs were
created, while the unemployment rate remained at 6 percent.
The Canadian dollar briefly firmed to a session high against
the greenback before softening as investors were also taking in
the U.S. jobs report.
Economists said the Canadian report did not change
expectations that the central bank would keep rates at 0.5
percent on Sept 9. Markets are pricing in a modest 18.1 percent
chance of a cut.
A separate report showed the labor productivity of Canadian
businesses fell 0.6 percent in the second quarter, while the
previous quarter's decline was revised lower.