Local employers created a modest 200 news jobs in January, but a decline in the number of people looking for work drove the unemployment rate down 20 basis points to 6.4 per cent, Statistics Canada reported Friday.
All the gains came on the Ontario side of the Ottawa River, where employers created 500 new jobs. Gatineau recorded a net loss of 300 positions.
Nationally, Canada's labour market got off to a rocky start to the year last month by shedding a surprisingly high 21,900 jobs - almost all full-time and mostly in the provinces of Ontario and British Columbia.
The result was weaker than economists had expected, even taking into account that the unemployment rate edged down one-tenth of a point to seven per cent, the lowest it's been since December 2008.
Markets are likely to overlook the official unemployment rate, however, given it was due not to strength in the labour market, but on a technicality.
Almost 58,000 Canada left the workforce in January or ceased looking for employment, the largest exodus from the labour market since 1995.
Regionally, Ontario and British Columbia were responsible for almost all the employment reversal last month with losses of 31,200 and 15,900 respectively. Alberta and Saskatchewan had a good month with gains of 9,700 and 7,300, while Quebec was largely unchanged.
Economists had expected a modest 5,000 gain in jobs nationally, but there was a signal in the Conference Board's help-wanted survey earlier in the week that the results would be weaker. The think-tank's sampling pointed to a loss of 16,600 jobs.
Still, the result isn't the shocker the drop suggests. Analysts were anticipating a payback in the labour market would come at some point, reasoning that the relatively healthy employment picture in Canada seemed out of step with an economy that had suffered through a rough patch in the last half of 2012.
Analysts said the previous two month's 88,000 jobs pick-up and the 12-month gain of 286,000 jobs didn't seem sustainable under the circumstances.
In a simultaneous release, Statistics Canada reported that exports fell 2.1 per cent in real terms in December, continuing a weakening trend in a key sector that represents about one third of the total economic output.
The big job losses last month came mostly in two areas. Education services, which shed about 31,200 works, and manufacturing, which lost about 22,000.
The agency said employment in manufacturing was now back to the level it stood a year ago.
There was good news in the construction trade, however, which saw its second consecutive monthly increase and added another 17,000 jobs in January. And employment in public administration rose 15,000, reversing the previous month's decline.