Canada loses record 129,000 jobs in January

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Canada suffered its worst job losses in more than three decades in January as the recession forced employers to cut a record 129,000 workers and pushed the unemployment rate to 7.2% from 6.6% in December.

The report by Statistics Canada showed the biggest monthly downturn in employment since the federal agency began collecting the data in 1976. It also showed record job losses in the manufacturing sector.

"This drop in employment exceeds any monthly decline during the previous economic downturns of the 1980s and 1990s," Statscan said in its report.

"Shockingly poor number. Almost every component surprised to the downside, except for the unemployment rate, which was higher than expected," said Craig Wright, chief economist at the Royal Bank of Canada

"Everybody is prepared for a pretty weak first quarter, but these number are probably surprising the more bearish views," he said.
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Sal Guatieri, senior economist at BMO Capital Markets said he expects more grim numbers in coming months.

"Unfortunately we will see more job losses. This is the start of a wave of job losses that will likely extend through the first half of this year," he said.

The dramatic downturn, far worse than expected, affected full-time and part-time employees and was spread across the private and public sectors.

The monthly decline was the biggest since Statscan began using its current methodology in 1976 and single-handedly wipes out the job gains made in all of 2008. Job losses since October total 213,000.

The last time the unemployment rate hit 7.2% was in November 2004.

Analysts had forecast a job loss of 40,000 and an unemployment rate of 6.8%. Finance Minister Jim Flaherty had hinted on Thursday the report would be grim, saying the job numbers would be "very regrettable" and that there is a risk that Canada's recession would get much worse.

Manufacturing, highly sensitive to U.S. demand, was the worst hit in January. The sector lost just over 100,000 jobs due largely to troubles in the auto sector.