TORONTO (AP) – Canada lost a record 129,000 jobs last month as the unemployment rate surged more than half a point to 7.2 percent, the single-worst monthly job loss figure in the country’s history.

The numbers are far worse than the 40,000 job losses economists expected and outpace losses in Canada’s two previous recessions in the 1980s and 1990s.

Statistics Canada began taking a labor force survey in 1976. Danielle Zietsma, a spokeswoman for Statistics Canada, said the agency does not have comparable data from before 1976 but said January’s figures are a record for the number of jobs lost in a single month. Canada’s labor market was much smaller during the Great Depression of the 1930s.

“Nobody was even looking for anything close to this,” said Craig Wright, chief economist at the Royal Bank of Canada. “Perhaps firms are looking at the gloom around the global economy, and all the gloom in the U.S. and saying even if we haven’t felt it just yet, it’s coming so let’s get ready for it.”

Wright said the country is witnessing a complete collapse in confidence and unprecedented uncertainty.

“It’s just big, sharp and ugly,” Wright said.

Wright said the U.S.-equivalent based on labor market size would be 1.3 million jobs lost. He said that the U.S. labor market is about 10 times the size of Canada’s.

“In that sense the U.S. actually outperformed Canada,” he said.

Statistics Canada reported Friday that the cuts in Canada brought to 213,000 the number of jobs the economy has shed in the past three months. That wiped out all the jobs gained from earlier in 2008.

Canadian Prime Minister Stephen Harper said his Conservative government would not alter its $32 billion economic stimulus package unveiled last month despite the dire jobs report.

“We will not be blown off track every time there is some bad news,” Harper said when asked about opposition calls to expand the stimulus program.

“We cannot have in Parliament, quite frankly, instability every week and every month, every time there’s a new number, people demanding a different plan. This is a massive stimulus plan.”

Harper said he anticipates more job losses to come but said the more troubling news came from the United States which posted even larger job losses than the previous month. Canada’s economy is largely dependent on what happens in the United States. Nearly 80 percent of Canada’s trade is with its southern neighbor.

“The United States remains the epicenter of this particular crisis and this remains very troubling,” Harper said.

The financial crisis and the global sell-off of commodities have hit Canada hard. The central bank is predicting economic output will contract 4.8 percent in the first quarter.

The drop in employment was most pronounced in manufacturing, which suffered the largest monthly decline on record, with 101,000 jobs lost.

“That’s an unbelievably large decline in every sense of the word. It’s phenomenal in terms of how sharp that has come off,” Wright said.

Avery Shenfeld, senior economist at CIBC World Markets, said many of the layoff notices announced in recent months were put into effect. Shenfeld said they knew hundreds of thousands of job losses were on their way but predicting exactly how many will show up in any given month is virtually impossible.

Unlike the U.S. there is no weekly data on unemployment benefit claims in Canada that can be used to gauge how quickly jobs are being lost.

Statistics Canada said Ontario’s auto sector, where the Detroit automakers have major operations, took the brunt of the cuts but didn’t release the exact number. The forestry sectors in British Columbia and Quebec, which are heavily dependent on U.S. homebuilders, were also hit hard.

Ontario, the center of manufacturing in Canada, lost 71,000 jobs in January. Ontario Premier Dalton McGuinty said he is looking at changing the welfare rules to allow more people to apply. Claims have seen a sharp uptick since the end of 2008.

Ontario Finance Minister Dwight Duncan called the jobless numbers “deeply troubling,” and said he hopes it will prompt the federal government to widen unemployment insurance benefits.

Federal Finance Minister Jim Flaherty said Canadians should expect further job losses.

“The United States economy has not hit bottom. The U.S. housing situation continues to deteriorate so Canadians ought to expect that this is going to be a difficult year,” Flaherty said.

He urged Parliament to acclerate the legislation process so that the stimulus package is passed and said they already lengthened the amount of time unemployed people will be able to collect insurance if they are laid off to 50 weeks from 45 weeks.

He had hinted at the bad news on Thursday when he described the figures to be released as “regrettable.”

TD Bank economist Derek Burleton, who earlier this week presented the gloomiest forecast to date in predicting 325,000 job losses in Canada during 2009, said he was shocked that the country is already one-third of the way there after one month.

“There is no sugarcoating this,” Scotia Capital economist Derek Holt said.

“Normally when you get that kind of surprise you immediately look beneath the print for some encouraging details, but there weren’t any,” Holt said. “This was an all-around bad report.”


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.