09/07/2012 08:40 EDT | Updated 11/07/2012 05:12 EST

Economy recoups last month's job losses, but gains only in part-time work

OTTAWA - Canada's economy hammered out 34,300 new jobs last month, a headline figure that beat expectations but contained enough cross-currents to divide economists' reactions.

All the gains in the August jobs report from Statistics Canada were part-time jobs. As well, there were heavy losses in the goods producing sector, which generally pays higher wages.

And the unemployment rate remained unchanged at 7.3 per cent as the labour force grew in step with the employment gains.

Bank of Montreal economist Doug Porter called the overall report a "little better than expected ... (but) underwhelming."

"I wouldn't get too excited because a lot of the strength was on the surface," he explained. "It was due to a big rise in part-time jobs and there was actually a decline in hours worked."

"A quick way to look at it was the unemployment rate was unchanged. It's been unchanged from three months ago and it's unchanged from a year ago."

Particularly disconcerting was that 44,000 construction jobs were lost during the month, he said, many in Ontario, which shed 24,900 workers overall.

Another weak link in the report was youth unemployment, which jumped half a point to 14.8 per cent, said Ken Lewenza, president of the Canadian Auto Workers.

But given that analysts had expected only a 10,000 bump in employment growth in August, Jimmy Jean, economic analyst with Desjardins Capital Markets, pronounced the report satisfactory.

He noted that the latest performance brings the monthly jobs increase for the year back to an acceptable average of nearly 20,000.

In response to media questions in Calgary, Bank of Canada governor Mark Carney also said Canadians should keep the numbers in perspective.

"Nobody is fully satisfied, obviously... but our job performance as a whole since the recession has been very strong," he said.

"All the jobs lost have been recovered, hundreds of thousands of additional jobs have been added, and most of those jobs, the vast majority of those jobs, have been private sector, they've been full-time jobs."

Carney admitted there is still slack on the labour market, which he said is one of the reasons the central bank has kept interest rates low.

Another positive was that hourly wages continue to rise, to 3.8 per cent higher than last year from 3.6 per cent in July.

The Canadian result was far stronger than what occurred in the United States, which saw a miserly 96,000 jobs increase for the month, below expectations and below the growth needed just to keep up with labour market growth.

The Canadian dollar climbed versus the U.S. currency on the simultaneous release of both reports, rising 0.46 of a cent to 102.21 cents U.S. in early morning trading.

The August report in Canada was almost a direct mirror image of the disappointing July data, when Statistics Canada reported the economy had shed 30,400 jobs. Even more striking, almost all the losses in July came in Quebec and were part time, whereas in August almost all the gains— 32,500 — were also located in that province and were part time.

The July numbers came as bad news for the governing Quebec Liberals, who at the time were in the middle of a tough re-election campaign they eventually wound up losing.

With the latest gains, Statistics Canada said employment in Canada has increased by one per cent, or by 177,000 jobs, over the past year, with most of the gains in full-time work. Over the past two months, the number of hours worked by Canadians has risen by 0.7 per cent.

But the August numbers went against the grain since all the increase came in part-time work, which added 46,700 employees, while there were 12,500 fewer full-time workers.

Meanwhile, goods producing industries shed 36,400 workers overall during the month, with construction dropping 44,000 jobs and manufacturing also down slightly.

The gainers were in the services sector, more than making up the slack by adding 70,600 jobs. Transportation and warehousing was up 37,000; professional, scientific and technical services, 20,000; building and other support services, 19,000; and natural resources up 8,800 workers.

Regionally — aside from Quebec — British Columbia, Saskatchewan and Manitoba also registered significant job increases, while Ontario saw the biggest decline.

In a separate report, Statistics Canada said the country continue to fall behind in labour productivity after a second quarter that showed a drop of 0.4 per cent, the first decline of the year.