Canadian economy loses 18,700 jobs in December

Grant Surridge, Financial Post Published: Friday, January 11, 2008:

The Canadian economy surprised observers by losing 18,700 jobs in December, as the strong loonie continues to weigh on the country's manufacturing sector.

Agriculture lost 23,000 jobs, while the transportation and construction sectors posted relatively strong gains.
Small and medium-sized businesses account for 60% of private-sector employment in Canada.

Several economists issued reports that said the weak job numbers mean the Bank of Canada will cut rates in January.

RBC Capital Markets economist Dawn Desjardins said that "the dominant risk at the moment is that persistent financial market volatility, tighter credit conditions and the slower pace of U.S. growth will weigh on Canada's economy this year."

The troubled US housing market, mounting foreclosures and the credit crunch could drag the US into a recession. As the US is the major export market for Canadian goods, the strong Canadian loonie is now posing a problem to employment.

It is inconceivable that Canada's housing market will not be affected by a sharp slow down in the US economy. Will this trigger a correction in Canada's real estate prices?