The Canadian economy continues to create jobs. Employment increased by 37,000 in April, bringing gains over the last four months to 207,000.

The unemployment rate edged down 0.1 percentage points to 7.6% in April.

The increase in jobs created was stronger than expected. “Though the implied 0.2% increase represents a solid monthly increase, what is even more noteworthy is that it built further on an already very impressive 170,000 (2.8% annualized) increase in the first quarter,” notes Bank of Montreal.

BMO says that the monthly increase came with 24,000 new jobs created in the retail and wholesale trade sector, and despite the fact that manufacturing employment dropped by 19,000 in the month.

Significant gains were also recorded in health care and social assistance (25,000) and transportation and warehousing (11,000). “The increase in the latter is encouraging as it might be suggesting that the weakness in tourism that set in following the terrorist strike is starting to reverse,” says BMO.

RBC Financial Group says that, ” perhaps the most important piece of information came in the tally of hours worked which shot up 0.9%. This strongly suggests that more job gains are in the offing as employers usually increase the hours of existing workers in the early stages of recovery before turning to hiring.”

RBC says that the report ensures that the Bank of Canada will continue to go it alone on the interest rate front. CIBC World Markets agrees, noting, “From the market’s perspective, there was nothing subtle about this report. Backed by a tidal wave of new hires and armed with a falling jobless rate, the Bank of Canada will have no hesitation in administering another quarter-point rate hike in early June.”

“This morning’s data should go a long way towards extinguishing any grumblings over the Bank of Canada’s recent interest-rate hike — and leave no doubt that there is much more to come,” say TD Bank’s economists.

BMO Nesbitt Burns agrees too, noting that the report clears the way for a series of 25 basis point interest rate moves by the Bank of Canada and should provide solid support to the Canadian dollar.

“Today’s numbers reinforce our expectation this rate will be increased a further 125 basis points before the end of the year,” says BMO. “The one negative aspect of today’s numbers is that they imply Canada will not come close to matching the very strong labour productivity growth evident in the U.S. so far in 2002.”