The Canadian economy added 23,000 jobs in July. According to Statistics Canada, this represents a slowing as job gains averaged 47,000 per month through the first six months of the year, but the strength of the report surprised economists.

More people entered the labour market in search of work, causing the unemployment rate to edge up 0.1 percentage points to 7.6%.

All of the new jobs were full-time, with 36,000 new jobs created in that area, as part-time positions disappeared.

More jobs continued to be added in manufacturing, which was up 14,000 in July and up 128,000 in the first seven months of 2002

“Today’s Canadian employment report is bound to put a big dent in the view that Canada’s economy is being taken down by the economic woes of its southern neighbor,” says TD Bank.”

Still, CIBC World Markets says that hiring is expected to moderate later this year, which will allow the Bank of Canada to leave interest rates on hold over the coming months. “23,000 is a much more sustainable pace than the blowout numbers we were treated to in the first half. While still positive, we’d look for the average employment growth to moderate further over the balance of the year. With growth prospects in the all-important U.S. market coming undone, the Bank of Canada will likely be forced to rethink its recent tightening stance, leaving rates on hold over the balance of the year.”

TD is more bullish, and takes the opposite view to CIBC. It says, “In sum, today’s employment report is another big tick in the plus column for the Canadian economy — and will certainly help to revive expectations that the Bank of Canada will engineer yet another interest-rate hike at its next fixed-announcement date on September 4, and rightly so. At the same time, it should also provide at least a temporary lift to Canada’s ailing currency.”

BMO Nesbitt Burns remains on the fence, saying, “With the Canadian economy continuing to create jobs at a solid pace, the Bank of Canada’s options are wide open, despite signs that the pace of expansion has cooled off.”