By Louise Egan
OTTAWA (Reuters) - Reports on Canada's employment and trade performance on Friday appeared to showcase the economy's resilience to the U.S. slowdown, but some less encouraging trends emerged in the details.
Statistics Canada said the economy created 19,200 jobs in April, more than the 10,000 forecast, while the unemployment rate ticked up to 6.1 percent from 6.0 percent in March as more people entered the work force.
The trade surplus in March widened more than expected to C$5.53 billion ($5.48 billion), its highest level since May 2007, thanks to surging prices for oil and natural gas exports, the federal agency said in a separate report.
The news did not change market expectations of a quarter-point interest rate cut by the Bank of Canada on June 10. The Canadian dollar initially shot higher after the jobs report but then gave back more than half its gains as traders read between the lines.
Taken broadly, the data confirms Canada's economy remains relatively robust as the United States teeters on the brink of recession. But economists and labor groups warned the headline numbers mask poorer quality jobs and declining export volumes.
"When you read into the numbers and you look at the sectoral breakdown it's not as strong as perhaps what the headline would indicate, in the sense that there was some increase in jobs in the service areas as well as education," said George Davis, chief technical strategist at RBC Capital Markets, referring to the jobs report.
All the gains in April were in full-time employment. However, most of those new workers were self-employed. These are often on short-term contracts with lower compensation. In addition, the private sector shed workers while the public sector expanded payrolls, particularly in education which is not normally a good barometer of economic activity.
The Canadian Labor Congress called the new type of jobs precarious, insecure and low-paying.
"Over and above the self-employment figures, the continuous bleeding of the manufacturing sector and the steep rise in youth unemployment further raise the specter of a looming economic slowdown, said Ken Georgetti, president of the CLC.
Still, employment grew 2.1 percent in the past year and full time jobs grew twice as fast as part-time ones in that period, Statscan said.
When adjusted for comparison to the United States, Canada's employment pictures still looks much healthier, with an employment rate of 64.5 percent in April compared with 62.7 percent for the United States.
TRADE GETS ENERGY BOOST
Surprising strong jobs growth throughout 2007 led the Bank of Canada to predict rising household income would sustain healthy domestic demand this year to offset weak exports, keeping the economy from shrinking.
But exports did just fine in March, climbing 1.6 percent overall, thanks to surging prices for oil and natural gas. That outweighed plummeting auto and forestry exports, hit by the U.S. housing crash and labor disruptions in the auto sector.
The climb in exports will help stave off a current account deficit and keep first-quarter economic growth slightly stronger than expected, economists said.
But that couldn't hide the fact that export volumes actually declined.
"Overall, it looks like the slowdown in the U.S. is taking a serious toll on Canadian exports, with two consecutive significant quarterly declines in exports in real terms," said Jacqui Douglas, economics strategist at TD Securities.
"So, going forward, international trade will likely return to its GDP-reducing ways, as we expect the weakness in the U.S. economy to persist into the first half of 2009, keeping a lid on Canadian exports," said Douglas.
Imports declined 0.3 percent to C$34.53 billion as labor disruptions in the United States caused automotive product imports to drop 11.4 percent, the worst since August 2003.
Despite the U.S. economic slowdown, overall Canadian exports to its top trading partner eked out a monthly gain of 0.7 percent and the trade surplus with the United States widened to C$8.63 billion from C$8.29 billion in February.
($1=$1.01 Canadian)
(Additional reporting by Frank Pingue in Toronto; editing by Rob Wilson)
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