Canadian investors in were greeted with positive employment news this morning. Statistics Canada is reporting that employment increased by an estimated 53,000, in December. The unemployment rate edged down 0.1 percentage points to 7.4%.

Most of the new jobs are full-time. Job gains over the past four months total 219,000 (+1.4%), four times the increase of 52,000 (+0.3%) observed during the first eight months of the year. Almost all of the job gains in 2003 were in full-time work.

The strong jobs report means that further cuts to Canadian interest rates will be likely pushed back until the spring.

“After stalling for six months in the middle of 2003, employment appears to have jumped right back onto that strong track it was on throughout 2002,” says BMO Nesbitt Burns. “The jobless rate is now down from the year-ago level of 7.5% (and the recent peak of 8.0%), and is only barely above last year’s low of 7.3%, raising serious doubts over how much slack is really left.”

“In spite of the beating inflicted by the loonie’s flight on Canada’s export-oriented manufacturing industries, this morning’s employment report suggests that the Canadian economy is still holding its own, and then some — and certainly puts a big dent in the odds that the Bank of Canada will cut interest rates on January 20th,” comments TD Bank.

That said, TD notes that the impact of the stronger loonie on Canada’s manufacturing industries was evident in this morning’s data. The manufacturing sector lost 4,000 jobs in December, leaving it with virtually no net job creation over the past four months, and a net loss of 57,000 jobs since the beginning of the year, TD says.

CIBC World Markets observes that, “It’s been 20 years since Canada ‘s labour market created so many jobs in a single four-month period, and the recent hiring surge is clearly consistent with the substantial pick-up expected in Q4 growth … For now, domestic sector strength is helping to offset the drag from a strong loonie..”

“This report was just the type of present Bank of Canada Governor Dodge was hoping to unwrap this Christmas season,” CIBC says.