TORONTO - The governing Liberals downplayed new figures that show Ontario lost more jobs than any other province, saying Friday that their plan to spur employment is working.

Ontario shed 75,400 full-time jobs in October but gained 36,600 part-time jobs, Statistics Canada reported.

That pushed the province's unemployment rate up to 8.1 per cent -- surpassing the national rate of 7.3 per cent.

Overall, Canada's jobs market suffered the biggest setback in almost three years, shedding 54,000 jobs overall -- all full-time and concentrated in Ontario's manufacturing and construction industries.

The figures are the latest piece of bad news for the Liberals, who were reduced to a minority government in the Oct. 6 election.

Last week, the government revealed this year's deficit would rise to $16 billion and that the province's economy shrank in the second quarter.

The 0.3 per cent drop in gross domestic product, which followed seven consecutive gains, was blamed on a weakened U.S. economy and an auto parts shortage caused by the tsunami in Japan.

Economic Development Minister Brad Duguid pointed to the same factors in explaining the latest round of job losses.

"We're up by about 60,000 net jobs, but as we've taken three steps forward with our economy and our recovery, from time to time we're taking a step back," he said.

"In this case, it's a reflection of the after-effects of the tsunami and the supply chain globally that's been impacted, as well as the challenges with the U.S. economy that Ontario continues to be susceptible to."

Ontario can still take credit for half the jobs that were created in Canada this year, Duguid added.

"While this month is a bit of a setback, we're going to continue to pursue the policies that will continue to build a strong economy here in this province," he said.

But many of those new jobs don't pay as well as the ones they're replacing, said NDP Leader Andrea Horwath.

A report from CIBC earlier this week pointed out that most of the new jobs have been of a lower-paying variety.

The stunning jobless figure proves that Premier Dalton McGuinty's jobs strategy -- which included imposing the HST and cutting corporate taxes -- has been an "utter failure," she charged.

"The HST hasn't brought jobs, across-the-board corporate tax giveaways aren't bringing jobs," Horwath said.

"That's why we think a more targeted approach is appropriate, where we're actually rewarding job creators with those tax credits."

Horwath also noted that Manitoba, which recently re-elected an NDP government, managed to create 1,600 jobs while staying away from the HST and corporate tax cuts.

"Dalton McGuinty is ignoring the fact that his strategies aren't working," she said.

"He's stubbornly sticking to a plan that is failing Ontarians, that's creating a situation where people are losing decent full-time work and having to cobble together two or three part-time jobs just to make ends meet."

The Progressive Conservatives warn that rising unemployment shows Ontario is in the midst of a "jobs crisis."

"We need new ideas and we need a new path," said Tory critic Monte McNaughton.

For example, the government should reduce regulations that keep small businesses from creating jobs, he said.

While Ontario "took a step backwards" with a contraction of 38,700 jobs, more than 131,000 have been created this year -- many of which were full-time, said TD economist Sonya Gulati.

"This showing represents an impressive comeback for a province most wounded by the financial crisis," she wrote Friday in a note to clients.

"Still, the path ahead looks to be anything but smooth sailing for manufacturing-heavy Ontario."