OTTAWA, April 5 (Reuters) - Canada's economy unexpectedly shed a net 2,200 jobs in March, largely in the services sector, while the jobless rate increased to a new 26-month high of 6.1%, data showed on Friday.
Analysts polled by Reuters had forecast a net gain of 25,000 jobs and the unemployment rate to rise to 5.9% from 5.8% in February.
With the 0.3% percentage point rise - the biggest jump since August 2022 - the unemployment rate is the highest since the 6.5% recorded in January 2022. Before the COVID-19 pandemic, Canada's jobless rate was last as high as 6.1% in November 2017.
The average hourly wage growth of permanent employees, however, accelerated to an annual rate of 5.0% from 4.9% in February, Statistics Canada said.
The growth rate of wages - closely tracked by the Bank of Canada (BoC) because of its effect on inflation - accelerated for the first time in three months.
Friday's jobs report is the last major data to be released before the BoC's next rate announcement on Wednesday, when the central bank is expected to keep its key policy rate on hold at a 22-year high of 5%.
The jobs data prompted money markets to increase their bets for a rate cut in June to close to a 75% probability from 67% before the numbers were released. Traders are not expecting a cut at the central bank's April 10 meeting.
The Canadian dollar extended losses to trade 0.58% weaker at 1.3620 to the U.S. dollar, or 73.42 U.S. cents at 1240 GMT.
The central bank has stayed on the sidelines since July of last year, and money markets see a cut likely in June.
Employment in goods sector increased by a net 29,900 jobs, mostly in construction, while services sector lost a net 32,00 jobs, led by accommodation and food services and wholesale and retail trade.
Overall, this was the first jobs decline in eight months, and were led by part-time work.
The employment rate, or the proportion of the population aged 15 and older who are employed, declined for the sixth consecutive month to 61.4% in March, as jobs growth continued to be outpaced by the rise in population.
Canada's population increased at an annual rate of 3.2% as of Jan. 1, 2024, the fastest annual growth rate since 1957, according to Statscan data.
Additional reporting by Dale Smith; Editing by Emelia Sithole-Matarise
