OTTAWA -- The Canadian economy gained 29,400 jobs in January after a surprising downturn in December -- a turnaround that will likely put some spring in Finance Minister Jim Flaherty's step as he prepares to deliver the budget next week.

The unemployment rate also slid 0.2 percentage points from December to 7.0 per cent for the first month of the year as the number of full-time jobs increased, Statistics Canada reported Friday.

Flaherty said the job trend was good.

"This is comforting as we plan the budget and plan modest, steady job growth in Canada," he said in Toronto.

While the job numbers exceeded economists' expectations of 20,000 more jobs in the month, some cautioned against reading too much into the volatile numbers, saying the employment trend is still sluggish.

"While no ball of fire, today's solid comeback represents a nice recovery from the ugliness in last month's Canadian employment report," BMO Capital Markets chief economist Doug Porter said in a report.

"Notably, though, the unemployment rate at 7.0 per cent is precisely unchanged from three months ago and from a year ago. In other words, the underlying trend in job growth is just firm enough to keep up with labour force population growth -- no better, no worse."

Others noted the rebound only made up for two-thirds of the 44,000 jobs lost in December.

Capital Economics said it "suggests that bad weather isn't the only factor depressing labour market conditions." It expects modest employment gains over the next few months.

CIBC economist Peter Buchanan agreed that the gain in jobs was better than expected, but noted the monthly job numbers don't say all that much about the whole economic picture.

"These are volatile numbers and also we did have that large decline (in December)," he said.

Trade numbers Thursday showed the Bank of Canada's much-hoped-for export recovery is still a work in progress, Buchanan added.

Canada's trade deficit grew to $1.7 billion in December. The increase came as Statistics Canada also revised the November trade deficit to $1.5 billion compared with an initial estimate of $940 million.

But there were encouraging signs in full-time work, Buchanan said.

The January jobs gain was led by a 50,500 rise in full-time work, while the number of part-time workers fell by 21,100.

The number of self-employed workers increased 28,300.

NDP finance critic Peggy Nash said the economy has stalled.

"Sometimes people turn to that when they don't have other options," Nash said of the growth in self-employed. "So I think it still doesn't indicate strong growth."

"Economic growth last year was the weakest it's been since the recession and unemployment has increased by nearly 300,000 under Stephen Harper's watch," Nash said. "We have about 1.3 million unemployed."

In January, the overall increase in employment included 15,200 more jobs in transportation and warehousing, another 14,600 in finance, insurance, real estate and leasing and 16,600 jobs added in professional, scientific and technical services.

Health care and social assistance added 16,900 jobs, while accommodation and food services grew by 17,000.

The additions were offset in part by 25,400 fewer people working in business, building and other support services, as well as 16,000 fewer employees in public administration.

The labour force participation rate -- the proportion of people either employed or underemployed and actively looking for work -- was 66.3 per cent, compared with 66.4 per cent in December as the labour force shrunk by 20,900 people.

Meanwhile, the employment rate or proportion of the working age population actually working was 61.6 per cent, unchanged from a month earlier.

Ontario's unemployment rate fell 0.4 percentage points to 7.5 per cent as 6,000 more people found employment and fewer people looked for jobs, Statistics Canada said.

Prince Edward Island employment rose by 1,000 in January, with the unemployment rate at 11.3 per cent. The number of people of working in New Brunswick fell by 2,400 as fewer people searched for work.

Here's what happened provincially (previous month in brackets):

  •   Newfoundland 12.0 (10.8)
  •   Prince Edward Island 11.3 (11.6)
  •   Nova Scotia 8.6 (9.2)
  •   New Brunswick 9.9 (9.7)
  •   Quebec 7.5 (7.7)
  •   Ontario 7.5 (7.9)
  •   Manitoba 5.6 (5.5)
  •   Saskatchewan 4.3 (3.9)
  •   Alberta 4.6 (4.8)
  •   British Columbia 6.4 (6.6)

Statistics Canada also released seasonally adjusted, three-month moving average unemployment rates for major cities but cautions the figures may fluctuate widely because they are based on small statistical samples. (Previous month in brackets.)

  • St. John's, N.L. 5.6 (5.9)
  • Halifax 6.8 (6.9)
  • Moncton, N.B. 7.0 (7.6)
  • Saint John, N.B. 6.4 (6.8)
  • Saguenay, Que. 7.5 (7.3)
  • Quebec 4.3 (4.7)
  • Sherbrooke, Que. 7.1 (7.0)
  • Trois-Rivieres, Que. 8.7 (8.3)
  • Montreal 7.9 (8.0)
  • Gatineau, Que. 6.8 (7.0)
  • Ottawa 6.3 (6.0)
  • Kingston, Ont. 6.6 (6.1)
  • Peterborough, Ont. 7.5 (6.0)
  • Oshawa, Ont. 7.2 (7.0)
  • Toronto 8.4 (8.5)
  • Hamilton, Ont. 6.0 (6.6)
  • St. Catharines-Niagara, Ont. 8.8 (8.9)
  • Kitchener-Cambridge-Waterloo, Ont. 6.4 (6.2)
  • Brantford, Ont. 5.9 (5.1)
  • Guelph, Ont. 7.3 (7.7)
  • London, Ont. 7.9 (7.7)
  • Windsor, Ont. 6.9 (7.7)
  • Barrie, Ont. 6.2 (5.2)
  • Sudbury, Ont. 6.8 (6.8)
  • Thunder Bay, Ont. 5.7 (5.8)
  • Winnipeg 5.8 (5.8)
  • Regina 4.4 (4.3)
  • Saskatoon 4.3 (4.2)
  • Calgary 4.8 (4.7)
  • Edmonton 5.5 (5.5)
  • Kelowna, B.C. 7.3 (7.0)
  • Abbotsford, B.C. 8.0 (7.9)
  • Vancouver 6.3 (6.4)
  • Victoria 4.9 (4.5)