CAD - Hits $1.07

Along with the impressive employment numbers, the loonie got an extra boost today from a rebound in world prices for oil, which jumped to almost $95 US a barrel, and a healthy rise in gold, which was up to more than $800 US an ounce.

The dollar closed at $1.0704 US after reaching a high of $1.0729 earlier in the day - heights not seen since the late 1880s, well before official monetary records were even kept. But for many analysts, it's a case of looking a gift horse in the mouth.

From a distance, the economy seems to be humming along quite nicely. But these analysts say a closer look reveals a shrinking manufacturing sector - aggregated by the higher cost of exports due to the loonie's rise - and a slowdown in the United States, Canada's largest export market.

Investors also appeared concerned, sending the Canadian stock market down, not up. It was the same on Wall Street, where the blue-chip Dow also slipped despite news of U.S. job growth of 166,000, double what analysts expected.

In Canada, even consumers are apparently not convinced that the good times will continue to roll, according to a survey that found their confidence sagging on concerns about job layoffs down the road if things turn bad. But first the good news.

Canadian employment continued to rise in October, split between full and part time, pulling the jobless rate down a notch to its lowest level since 1974, which in fact is the furthest back that comparable levels go, making the jobless rate a record low. And so far this year, employment has increased by 2.1 per cent or 346,000 jobs, the strongest pace of growth in five years, lifting the employment rate to a record high 63.7 per cent.

But TD Bank deputy chief economist Craig Alexander said "... something does not add up."

"There is a considerable dichotomy between the employment gains and recent economic data," he said. "Either employment growth is going to slow remarkably fast or forecasters, such as ourselves, have completely misjudged the underlying strength of the economy," Alexander said.

National Bank of Canada economist Stefane Marion also admitted to being "baffled" that the public sector which accounts for just 19 per cent of total employment, has accounted for all of the job growth for the past quarter year, while private sector payrolls have shrunk.

"This disconnect is unprecedented and we do not think that it can be sustained," Marion said. And J.P. Morgan economist Ted Carmichael forecast a significant slowdown in job growth in the months to come, noting that private sector employment has been a better guide to downturns in the economy and that business payrolls have shrunk by 12,000 over the past three months.

Consumers also sense something doesn't add up, according to the Conference Board of Canada. It reported that its consumer confidence index fell 1.7 points in October to 98.2 as "consumers grew increasingly wary of future job market conditions."

There was a "notable decline" in optimism about the outlook for jobs. Confidence fell in the Atlantic Provinces, Ontario, and the Prairies, was flat in Quebec, but rose in British Columbia, although that gain followed five straight months of deterioration in the mood on the West coast.

Not everyone, however, was shocked by the continuing job surge, although the reason doesn't bode well for the economy either.

"In fact, it only underlines the serious shortage of labour facing our country that our members have been warning us about for some time," said Garth Whyte, of the Canadian Federation of Independent Business.

"Not only are many businesses having trouble finding workers, but the tight labour market is also pushing up wages, which is a real concern for smaller companies already coping with the strong dollar, high energy costs and uneasy credit markets."

Wages last month were 4.1 per cent higher than a year earlier, nearly double the increase in the cost of living over that time, although the gains ranged from 8.4 per cent in Newfoundland, 7.1 in Alberta and 6.2 in Saskatchewan to as little as 0.1 per cent in Prince Edward Island, and 1.8 in British Columbia.

But Canadian Labour Congress economist Erin Weir said that it's about time workers got a fairer share of the economic pie following years of record profit growth and "two decades of anemic wage growth." The strong wage growth is despite what was seen as a slight decline in the quality of the jobs being created.

"The tip towards part-time and self-employed jobs this month took CIBC World Market's Employment Quality Index down a few notches this month, but is still the second best reading for 2007," said CIBC economist Avery Shenfeld Shenfeld. Some of the job growth was temporary and due to hiring related to the Ontario election, he said, also noting that the muted performance of private sector employment is more in line with the moderate performance of the economy.