The unemployment rate dropped to 6.1 percent from November’s 6.3 percent, matching a 31-year low from May and June, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News expected 15,000 new jobs and a 6.3 percent jobless rate, based on median estimates.

The report shows employers continued to hire at the end of the year, even after third-quarter economic growth was the slowest since 2003. That may support Bank of Canada Governor David Dodge’s November assertions that the country’s economic slowdown would be “mild” and “short-lived.” Economists say the central bank will keep borrowing costs unchanged on Jan. 16.

“It’s absolutely stunning,” Marc Levesque, chief fixed- income strategist at TD Securities in Toronto, said in an interview. “It’s even more surprising when you consider that growth has been weak.”

The job surge makes it less likely the central bank will lower the 4.25 percent benchmark interest rate to boost demand, as economists surveyed by Bloomberg have predicted for later this year, Levesque said.

Two-thirds of December’s jobs gain came in services. Employers hired 14,900 people in health care, 12,100 in business and building support services, and 11,800 in education.

Canadian Dollar

The Canadian dollar was little changed at 8:31 a.m. in Toronto from 84.93 cents late yesterday, the lowest in almost 11 months. The currency rose to its highest since Jan. 4, 1978, on May 31, reaching 91.44 U.S. cents.

The yield on the banker’s acceptance contract due in March rose 4 basis points to 4.3 percent on the Montreal Exchange, indicating more investors are betting the central bank won’t cut interest rates before then.

December’s net job gain came mostly from full-time employment, with companies creating 36,900 full-time positions and 24,800 part-time jobs. Employers hired 22,400 workers in November and 50,500 in October.
In a reversal of recent trends, job gains in goods- producing sectors came from manufacturing and agriculture, while commodity-related companies shed 2,600 employees.

Manufacturers hired 10,100 people and farms hired another 8,300, Statistics Canada said. Factories, which have had to contend with a higher currency that makes their wares more expensive abroad and higher production costs, have fired 59,300 people in the past 12 months.

Ontario and AlbertaOntario, home to most of Canada’s automobile production and a hub for other types of manufacturing, added 41,600 jobs. Alberta, the western province where an oil boom is creating labor shortages, shed 3,600 jobs in December, lowering the total gain for 2006 to 108,500, which was the province’s highest increase since 1980.

Quebec, Canada’s second-biggest province, added 7,100 jobs. Alcan Inc., the world’s second-largest aluminum producer, said last month it would spend $1.8 billion in Quebec to expand its smelting capacity by 450,000 metric tons after aluminum prices jumped in May to the highest in at least 19 years. A new plant in Jonquiere, Quebec, will provide jobs for 740 new employees and require 1,500 construction workers to build.

Canada’s strong dollar and slower U.S. demand have hurt exports, battering manufacturers based in provinces such as Ontario and Quebec. Goodyear Tire & Rubber Co., the largest tire maker in North America, said yesterday it would cut 800 jobs at its Valleyfield, Quebec, plant. The factory will stop producing tires and become a facility that mixes material used in tires, keeping only 200 employees, the company said.
`Increasing Momentum’

Still, Dodge has said Canadian companies are “more nimble” and adjust to challenges faster than in previous years, the Globe and Mail reported Dec. 27, citing an interview. Companies have a “better attitude,” as they face increased competition in both goods and services from globalization, Dodge told the newspaper in an interview.
“The strong employment gain and drop in the unemployment rate at the end of the fourth quarter indicates increasing momentum heading into the first quarter of 2007,” Ted Carmichael, an economist with JP Morgan Securities in Toronto, wrote to clients today. “It also virtually ensures that the Bank of Canada will not ease its policy rate any time soon.”

Information, culture and recreation companies such as Torstar Corp. shed 5,600 workers. Toronto-based Torstar, publisher of Canada’s largest newspaper, said last month it would fire 85 employees.

Yearly Gains
The economy added 344,800 jobs in 2006, the 14th straight yearly gain and the fastest pace of increase since 2002, the statistics agency said. Canada has added about 1.7 million jobs since 2001 in a country of 32.6 million people, as companies earn record profits from exports of commodities such as energy and metals. The job growth has stoked record homebuilding and consumer spending, which the Bank of Canada says will sustain growth as the dollar crimps factory goods.

Average hourly wages rose 2.6 percent from a year earlier, slower than November’s 2.9 percent rate.

http://www.bloomberg.com/apps/news?pid=20601082&sid=a5LqytBzMj6s&refer=canada