(Adds details)
OTTAWA, July 10 (Reuters) - Fewer Canadians lost their jobs in June than expected even as the unemployment rate hit an 11-year high, adding credence to the view that the economy is no longer in freefall and that the worst of the recession may be over.
Statistics Canada on Friday said net job losses in June totaled 7,400 and the unemployment rate rose to 8.6 percent from 8.4 percent in May -- the highest since February 1998.
Analysts surveyed by Reuters had expected a net employment decline of 35,000 last month and a jobless rate of 8.7 percent.
The news triggered a rise in the Canadian dollar and economist hailed the data as a positive surprise. However, the details of the report were more troubling, revealing that the only strength came from part-time employment and that the recession continued to bludgeon the manufacturing sector.
"On the overall number it's essentially flat, a small decline, but essentially flat, and in this environment flat is the new up so I think generally this is a good news story," said Craig Wright, chief economist at the Royal Bank of Canada.
But Doug Porter, deputy chief economist at BMO Capital Markets, said, "The good news such as it is stops at the headline."
"So it's not nearly as favorable results as the headline would suggest but one thing I would say is it's not the big disappointment we saw in the U.S.," he added.
The Canadian dollar
The pace of job losses slowed sharply in the second quarter at 13,000 compared with 273,000 in the first quarter, Statscan said.
"While employment remains well below its October 2008 peak, there was a notable shift in the pace of the downward trend in employment in the last three months," Statscan said in its release.
The Bank of Canada has already cut its key interest rate to 0.25 percent, which it considers the lower limit, but has laid out a plan for further unconventional action to stimulate the economy if needed.
So far, the bank has seen no need to follow through on that plan, which could involve creating money to buy government or corporate bonds in the market as a way of pushing down longer-term rates.
The details of the employment report showed that the only jobs being created in June were part-time and that more people were working for themselves.
The economy shed about 48,000 full-time jobs and added 40,000 part-time positions in the month. Self-employment rose by 37,000 while dependent employment fell by 45,000. The private sector job losses far outweighed those in the public sector.
Manufacturers continued to hemorrhage jobs while services industries added staff to their payrolls, with the notable exception of the hard-hit trade sector.
Wages for permanent employees gained 3.4 percent in June from a year earlier, up slightly from the 3.2 percent increase in May.
(Additional reporting by Toronto Treasury Team) (Editing by Theodore d'Afflisio)