Canadian employers added jobs for the second straight month in September, and the unemployment rate unexpectedly fell, adding to evidence the U.S.’s largest trading partner is emerging from its recession. Employment rose by 30,600, Statistics Canada said today in Ottawa. The jobless rate fell to 8.4 percent from August’s 8.7 percent. The median forecast of economists surveyed by Bloomberg was for a 5,000 gain in jobs and unemployment at 8.8 percent. The report may increase pressure on the Bank of Canada, with its benchmark rate at a record low, to follow Australia into raising borrowing costs. The central bank lowered its benchmark lending rate to 0.25 percent this year and pledged to keep it there until June 2010 unless the inflation outlook changes materially. “Certainly on the back of what we saw from the central bank of Australia, the report has the potential to lift markets up. There may be a tendency to draw those linkages,” said Stewart Hall, an economist at HSBC Securities in Toronto. He added such an expectation would be “misplaced” given Canada’s economy is more closely linked to the lagging U.S. economy than Australia, and Canada’s recovery will be more “incremental.” Bank of Canada Senior Deputy Governor Paul Jenkins said yesterday that this week’s surprise Australian rate increase isn’t necessarily a precedent for Canada. Dollar Rising The yield on Canada’s overnight index swap due in one year, a security based on investor expectations of where the Bank of Canada’s rate will be at that point, rose above 0.5 percent yesterday for the first time in eight weeks, and was trading at 0.597 percent at 7:22 a.m. today. The Canadian dollar advanced 0.8 percent to C$1.0432 per U.S. dollar at 7:30 a.m. in Toronto, from C$1.0518 yesterday. The public sector, along with manufacturing and construction, led the rise in September employment. Construction, benefiting from rising home prices and a government stimulus package that targets the industry, added 24,600 jobs during the month. Manufacturing firms, which have fired more than 200,000 workers since the start of the recession at the end of last year, added 26,100 jobs. Eight of the 16 industries tracked by Statistics Canada recorded job gains. A 91,600 increase in full-time jobs was offset by a 61,000 decline in part-time employment, the statistics agency aid. Wage Growth Slows Canadian average hourly wages rose 2.5 percent in September from a year earlier, the slowest pace in two and a half years, Statistics Canada said today. Today’s data follow statements by Canadian leaders that the jobless rate will continue rising in coming months even as the country emerges from a recession. Prime Minister Stephen Harper said last month the country probably remains in recession because of “challenges” in the job market, even as recent signs of recovery have helped fuel rallies in the stock market and currency. “We have anticipated that we will have some continuing job losses,” Finance Minister Jim Flaherty said in an Oct. 4 interview, two days after the U.S. Labor Department reported that country’s unemployment rate reached the highest level since 1983. “The job comeback will lag the comeback in the real economy.”

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