10/07/2011 09:00 EDT | Updated 12/07/2011 05:12 EST

Canada's Economy Creates 61,000 New Jobs As Unemployment Rate Falls To 7.1 Per Cent

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OTTAWA - The Canadian economy appears to be weathering the global economic storm quite well, churning out 61,000 net new jobs in September and taking the unemployment rate to a near three-year low of 7.1 per cent.

The large increase comes after two months of basically flat employment that had seen the unemployment rate edge up to 7.3 per cent in August.

The strong headline number — which beat average economist predictions of a 15,000 rise — was more impressive than the details, but will still be welcomed by markets given the backdrop of impending gloom in the global economic situation.

"Yes we'll always take an upside over a downside to jobs, but in doing our own job, we can't exactly be over the moon on this report as markets are by way of the Canadian dollar's reaction," wrote Derek Holt, vice-president of economics at Scotiabank.

Economists had expected employment to be positive last month mostly due to a seasonal hiring spree in the education sector as schools returned to session. About 38,000 education employees were hired.

Holt said the start to the school season always distorts the numbers.

"It's not like there was a sudden rush to hire teachers and related workers," he wrote.

"The sector has posed a problem to StatsCan for years. The seasonal adjustment factors have been distorted by contract shifts in the education sector over recent years as we've long argued."

Outside of the education hires there were other strengths as well, including in the professional class, scientific and technical services, hotel and food, natural resources and public administration.

Weakness was also evident in private sector hiring and especially goods-producing segments of the economy.

While all the gains were in full-time work, they came in the public sector and in the self-employment class, which is generally a signal that some could not find regular employment.

The private sector actually shed about 15,000 jobs and the key manufacturing sector lost 23,500 workers in September, Statistics Canada said. There was also a large 35,000 drop of employment in the finance, insurance, real estate and leasing industries.

Still, the strong gain in employment last month, along with positives in other minor economic indicators recently, is more evidence the Canadian economy did not fall into recession in the third quarter — as some had feared — after a small dip in the second quarter.

Statistics Canada notes that employment in Canada has been relatively strong over the past year, with the economy creating 294,000 new jobs, a far better record than what has been happening in the United States.

Over the past year, full-time work has outstripped part-time, resulting in a two per cent increase in hours work, and gains in private sector employment has been twice as strong as those in the public, government sector.

Regionally, employment was up in eight of the 10 provinces in September, with the biggest increase being a 31,600 gain in British Columbia.