Canada's domestic economy turned in one of the strongest job creation months of the year in September, adding an eye-popping 52,100 new jobs that was five times more than economists expected.

But it was the labour data south of the border that drew the superlatives from economists and markets — which if true, suggest the U.S. recovery is finally underway.

The U.S. labour department said Friday morning that 114,000 new jobs were created in September, but more importantly revised upwards its data for July and August — adding 86,000 jobs to those two months. For the three months, job creation averaged 146,000 and took the unemployment rate to 7.8 per cent, the lowest in four years.

The Canadian dollar jumped more than half a cent on the news to 102.62 cents US, and markets were solidly up in both Toronto and New York.

"I think (the U.S.) is the bigger news today, even for Canada," said Bank of Montreal deputy chief economist Doug Porter.

"This is exactly what the Canadian economy needs right now because the consumer is close to being tapped out, housing doesn't have any more room to grow, the government sector is cutting back (and) business are understandably cautions. So what we really need now is exports and exports (which) need the U.S. economy to get going."

In another promising signal, the Canadian Institute of Chartered Accountants' third-quarter survey found that 46 per cent of senior executives expect the number of employees at their companies to increase in the next year. That's up slightly from 41 per cent in the second-quarter survey.

Finance Minister Jim Flaherty's office issued a statement that he was "encouraged" by the latest Canadian gains, noting that they bring to 820,000 the number of new jobs added since July 2009. Flaherty said it was the best job creation record in the G-7.

The gain was the third biggest of the year and surprised the experts, which had expected a pickup of 10,000.

But it wasn't enough to put a dent in the unemployment rate, which edged up one-tenth of a point to 7.4 per cent. That's because while thousands of Canadians found work in September, even more — 72,600 — joined the labour force.

Economist Erin Weir of the Progressive Economics Forum said the jump in Canadians entering the workforce suggests many "are still waiting in the wings" for prospects to improve.

Economists also pointed out that the details were not as strong as the headline suggests, including the fact that two-thirds of the new jobs where in the self-employment category.

Scotiabank's Derek Holt noted that aggregate hours worked actually declined 0.3 per cent despite there being more people working.

"It’s hours worked that get people paid so this is a significant dent against the headline. It’s not clear to me how this happened if headline and full-time jobs were up so solidly," he said.

Still, the pop in new jobs was unexpected given that most economic indicators of the past few months have presented a picture of a domestic economy struggling to maintain momentum amid a general slowdown around the world, particularly the United States, Europe and China.

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