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Canada's economy saw a net loss of about 5,500 jobs in August, which pushed the unemployment rate up one tenth of a point to 7.3 per cent.

It was the first time in five months that the number of jobs dropped in Canada, and comes as politicians on both sides of the border put job creation at the top of their priorities for the fall.

Prime Minister Stephen Harper on Thursday said his government's top priority when Parliament resumes will be Canada's continued economic recovery and job creation, the same day U.S. President Barack Obama outlined a US$450-billion ($444 billion) proposal to ease unemployment south of the border.

Statistics Canada said the construction industry was hit hardest in August, losing more than 24,000 jobs. The transportation and warehousing sector shed 13,500 workers, while employment in the natural resources sector fell by 11,500.

The information, culture and recreation sectors saw combined losses of 11,400, while employment at utilities fell by more than 9,000.

The month of August was expected to give the economy a slight bump, as students prepared to return to school and selected jobs. But education employment increased only by 9,500.

The health care and social assistance sector saw the biggest increase in August, as it gained 50,100 jobs.

August was also a very tough month for young workers, with StatsCan reporting that 17.2 per cent of high school and post-secondary students aged 15 to 24 were unemployed this summer. That was well above the 14 per cent unemployment rate that existed for this group prior to the recession.

Across the country, there were few significant changes in employment.

In Newfoundland, the unemployment rate increased 1.8 points to 13.7 per cent, as the province shed 3,400 jobs. Quebec's unemployment rate went up 0.4 points to 7.6 per cent.

Overall, employment has grown 1.3 per cent in Canada over the past 12 months.

Eric Lascelles, chief economist with RBC Global Asset Management, says the Canadian job market is slowing but remains in generally good shape despite the recent report.

"I'm not too worked up about it. We see some funny numbers occasionally... but the broad trend is still on average 10,000 to 20,000 new jobs per month. That's pretty decent," he told Â鶹ӰÊÓ Channel.

"I'd like to see the numbers get better and I think they will. But I'm not interpreting this as a sign of a recession," he added.

Lascelles noted there are signs that blue-collar jobs in Canada have been dragged down somewhat by the ailing U.S. economy but remained upbeat about the bigger picture. Most of the job losses were part-time, while full-time employment is increasing, he noted.

In the U.S., where both a presidential election and the possibility of a double-dip recession are looming, Lascelles said the big question about Obama's ambitious plan is whether the Republicans will support it. The White House and Republicans fought bitterly over the debt ceiling crisis over the summer and bipartisan co-operation tends to drop off as elections draw near.

"I think this has a chance (of passing) in that it focuses on tax cuts not spending. The Republicans should like that," said Lascelles. "It probably won't emerge unaltered but I think we will see a stimulus." Obama's plan stands to create some one million jobs, though seven million have been out of work since the credit crunch of 2008.

"It's not enough to completely save the U.S. economy but it's an important step forward," said Lascelles.

With files from Canadian Press