TORONTO (Bloomberg) — Canada added fewer jobs than expected while the country's main realtor group cuts its home resales forecast, underscoring the economic recovery will remain sluggish.

Employment rose by 3,000 after a decline of 6,600 in September, Statistics Canada said today, versus economist predictions for a 15,000 gain. The jobless rate declined to 7.9 percent from 8 percent as the labour force shrank. The Canadian Real Estate Association today reduced its forecast for the second time this year, citing weak consumer confidence.

The Bank of Canada left its key policy interest rate unchanged at one percent while cutting its economic growth forecast last month and saying it will take until the end of 2012 for output to reach full potential.

The central bank also said that unemployment "remains elevated," while Finance Minister Jim Flaherty has curbed increases in payroll taxes to foster hiring.

"It looks like eight percent is going to be about as low as we can go, at least within the next year," said Derek Burleton, a senior economist at Toronto-Dominion Bank in Toronto, referring to the jobless rate. "Consumers are going to constrain their rate of spending to a modest clip."

The jobless rate will average 7.9 percent in the first two quarters of next year, according to economists surveyed by Bloomberg.

"Although employment has returned to its pre-recession level of October 2008, the unemployment rate remains around 8 percent, well above its pre-recession level of 6.2 percent," Statistics Canada's report said. The pace of job gains has slowed to an average of 5,700 in the last four months from a 51,000 monthly pace in the first half of this year.

"We continue to see a gradual economic recovery unfolding, albeit at a slower pace in the fourth quarter," Luc Jobin, chief financial officer at Canadian National Railway Co., said on an October 26 earnings call.