OTTAWA -- Canada's domestic economy turned in one of the strongest job creation months of the year in September, adding an eye-popping 52,100 new jobs that was five times more than economists expected.
But it was the labour data south of the border, which suggest the U.S. recovery is finally underway, that demanded the attention of economists and markets.
The U.S. Labor department said Friday morning that 114,000 new jobs were created in September, More importantly, it revised upwards its data for July and August -- adding 86,000 jobs to those two months. For the three months, job creation averaged 146,000 and took the unemployment rate to 7.8 per cent, the lowest in four years.
The Canadian dollar jumped more than half a cent on the news to 102.62 cents US, and markets were solidly up in morning trading in both Toronto and New York before backing off later in the day.
"I think (the U.S.) is the bigger news today, even for Canada," said Bank of Montreal deputy chief economist Doug Porter.
"This is exactly what the Canadian economy needs right now because the consumer is close to being tapped out, housing doesn't have any more room to grow, the government sector is cutting back (and) business are understandably cautious. So what we really need now is exports and exports need the U.S. economy to get going."
Some supporters of Republican challenger Mitt Romney suggested a conspiracy inside the Labor Department to save U.S. President Barack Obama was afoot, but CIBC chief economist Avery Shenfeld says if the data was pumped up, something less sinister may be involved.
"The ... survey, like Canada's monthly survey, is notorious for producing fleeting outliers, albeit not this large," he said.
"Based on grossing up the results of a monthly sample of Americans, and comparing it to the prior month's sample, the resulting count is not nearly as reliable as the payrolls report," he said.
In another promising signal, the Canadian Institute of Chartered Accountants' third-quarter survey found that 46 per cent of senior executives expect the number of employees at their companies to increase in the next year. That's up slightly from 41 per cent in the second-quarter survey.
Finance Minister Jim Flaherty's office issued a statement that he was "encouraged" by the latest Canadian gains, noting that they bring to 820,000 the number of new jobs added since July 2009, when the economy started to recover from recession. Flaherty said it was the best job creation record in the G7.
The gain in Canada was the third biggest of the year and surprised the experts, which had expected a pickup of just 10,000 jobs.
But the gain wasn't enough to put a dent in the unemployment rate, which edged up one-tenth of a point to 7.4 per cent. That's because while thousands of Canadians found work in September, even more -- 72,600 -- joined the labour force.
Economist Erin Weir of the Progressive Economics Forum said the jump in Canadians entering the workforce suggests many "are still waiting in the wings" for prospects to improve.
Economists also pointed out that the details were not as strong as the headline suggests, including the fact that two-thirds of the new jobs where in the self-employment category.
Scotiabank's Derek Holt noted that aggregate hours worked actually declined 0.3 per cent despite there being more people working.
"It's hours worked that get people paid so this is a significant dent against the headline. It's not clear to me how this happened if headline and full-time jobs were up so solidly," he said.
Still, the pop in new jobs was unexpected given that most economic indicators of the past few months have presented a picture of a domestic economy struggling to maintain momentum amid a general slowdown around the world, particularly the United States, Europe and China.
September's increase brought the number of jobs created since last September to 175,000.
The report was even stronger than August's 34,000 jobs increase, which were all part-time.
Last month, the vast majority of new jobs were full-time and all in the private sector, although roughly two-thirds were in the self-employment category -- jobs that economists say are often lower-paying and less productive.
Statistics Canada said most of the new jobs were taken by workers in the core 25-54 age group, and mostly by men in the first notable increase in employment among men since March of last year.
"With this increase, the employment level for core-aged men is back to its pre-recession peak of October 2008," the agency said, although the rate of employment remains slightly below that of four years ago.
Regionally, most of the action occurred in Ontario, which saw an increase of 31,600 jobs. Quebec and Manitoba also saw gains.
Statistics Canada said the biggest gains occurred in the retail and wholesale trade sectors, which saw some 34,000 jobs created, while the number of jobs in construction, which has been weak in recent months, rose by 29,000.
Work in the information, culture and recreation industries saw an increase of about 24,000, and there were about 8,700 new agriculture jobs in the month.
Detracting from the positives were the loss of 19,000 workers in a general category called other services and a 17,000 decrease in business, building and other support services.
