* Employment growth remains sluggish in October
* Building permits soar on single-family housing
* Outlook worsens for home resales
* No rate hike expected until next year
* C$ falters before rebounding to hit parity
By Louise Egan
OTTAWA, Nov 5 (Reuters) - Canadian employment numbers barely inched higher in October as the sputtering economy created far fewer jobs than forecast, and left expectations intact for interest rates to stay on hold.
About 3,000 people -- a number considered negligible -- found work in the month, according to Statistics Canada data released on Friday. That was not enough to offset the 6,600 jobs lost in September and well below the 15,000 employment gain forecast by analysts in a Reuters poll.
Job gains in recent months have been a fraction of those seen earlier this year. Statscan said the average monthly employment growth was 5,700 in the past four months compared with 51,000 in the first half.
"I think there might be a trace of disappointment on the headline number, but I think on balance this doesn't move the needle in a major way," said Doug Porter, deputy chief economist at BMO Capital Markets.
All the gains were in full-time jobs and private sector hiring outpaced that of the public sector, suggesting the recovery was becoming more entrenched.
The unemployment rate eased to 7.9 percent from 8 percent in September mainly because fewer people were in the labor force actively looking for work.
Other reports on Friday on the construction and housing sectors were mixed. Statscan said building permits soared 15.3 percent in September, largely due to a resurgence in plans for single-family housing.
But the Canadian Real Estate Association issued gloomy forecasts for home resales this year, predicting a decline of 4.9 percent versus its previous estimate of a 1.2 percent decline.
RATES ON HOLD
The data cocktail did little to change analysts' view that the Bank of Canada will stand pat on interest rates until well into 2011. The bank kept its key rate on hold last month at 1 percent after three straight increases.
"We expect the bank to stay on the sidelines for the remainder of the year with the next hike likely only after there is solid evidence that concerns about both the external and domestic developments have abated," said Dawn Desjardins, assistant chief economist at RBC Economics.
Markets see a 97 percent probability the central bank will
hold rates steady on Dec. 7 and expect no further hike until
roughly mid-2011, according to a Reuters calculation of yields
on overnight index swaps.
The Canadian dollar
DETAILS ENCOURAGING
The heaviest hiring took place in the information, culture and recreation sector, followed by construction, manufacturing and agriculture. Retail and wholesale trade let go workers.
Some details in the report were more encouraging. All the gains were in full-time jobs, while part-time employment fell for a third straight month. In the first half of this year part-time jobs grew almost three times as fast as full-time ones.
Similarly, private sector hiring outpaced that of the public sector, suggesting a more deeply entrenched recovery.
The average hourly wage of permanent employees, closely watched by the Bank of Canada for inflation pressures, rose 2.1 percent in October from a year earlier. The equivalent figure for September was 2.5 percent.
Unlike in the United States, Canadian employment levels have returned to pre-recession levels. But Statscan said the jobless rate has stayed stubbornly above the pre-crisis 6.2 percent level largely because the working-age population has grown 2.9 percent and the labor force -- those looking for work -- has risen 1.9 percent.
Despite the gains, full-time employment remains well below its peak, prompting concerns about the quality of jobs.
A report by CIBC this week said the public sector and construction industry, helped by stimulus spending, have accounted for one-third of all jobs created during the recovery. (Additional reporting by Howaida Sorour, Ka Yan Ng and Solarina Ho; editing by Rob Wilson)