November 29, 2010 / 1:18 PM / 9 years ago

PREVIEW-Canada seen adding 18,000 jobs in November

 WHAT: Canadian November employment report
 WHEN: Friday, Dec. 3 at 7 a.m. (1200 GMT)
 REUTERS FORECAST:
 ECONCA
                     Nov       F'cast range    prior (Oct)
 Jobs gain/loss      +18K      +5K to +30K     +3K
 Unemployment rate   7.9 pct   7.8-8.0 pct     7.9 pct
 For individual forecasts see: [ECI/CA]
 FACTORS TO WATCH:
 Employment growth slowing: After recouping all of the
recession's job losses in about a year, market watchers expect
the pace of job creation to continue at its recent tepid pace.
Economists expect to see more modest labor data in November
compared with earlier this year. The unemployment rate is seen
staying relatively high. However, on an upbeat note, a recent
report showed a rise in consumer confidence, albeit at lower
levels than earlier this year. [ID:nN24234235]
 The economy added negligible jobs in October, reinforcing
market expectations interest rates will stay on hold. The Bank
of Canada recently said it would have to consider any further
rate hikes carefully given the patchy global recovery and
expected curbs on Canadian growth. [ID:nN27276109]
 But a string of recent domestic data has fueled hope the
recovery would get back on track. [ID:nN18283691]
 Types of jobs: Markets are watching for the split on
strength and weakness in the underlying details on part-time
versus full-time positions, public sector or private sector,
and whether jobs are created in manufacturing or services
industries.
 Wages: Investors will also be looking at wage pressures,
which cooled in October. The Bank of Canada closely watches
average hourly wages of permanent employees for any sign of
inflationary pressures. Upward pressure on wages could make it
harder for the central bank to keep its key interest rate on
hold in an environment of very low rates and a relatively
resilient domestic economy compared to the fragile U.S.
economy.
 Recent data showed the annual inflation rate jumped
unexpectedly to a two-year high in October, but most analysts
said the move was unlikely to spur the central bank to rush
interest rate hikes unless a clear trend of rising prices is
spotted. [ID:nN23105406]
 MARKET IMPACT:
 Jobs growth that exceeds market forecasts could alleviate
concerns of sluggish economic growth, support the Canadian
dollar and weaken bond prices. The commodity-linked currency
has swung in a wide range in recent sessions, boosted on the
one hand by upbeat North American data, but rattled lower by
worries over peripheral euro zone debt and geopolitical
tensions in Korea.
 A surprise drop in hiring would keep the currency under
pressure. Still, the Canadian dollar is expected to gain
momentum against its struggling U.S. counterpart and trade
around parity for much of the next year, supported by strong
fundamentals, a recent Reuters poll showed. [CAD/POLL]
 All of Canada's primary securities dealers forecast the
central bank will keep rates steady at 1.0 percent into early
2011, according to a Reuters poll published on Oct. 19.
[CA/POLL]
 Markets were pricing in about a 94 percent chance of steady
rates in December, according to a Reuters calculation of yields
on overnight index swaps. BOCWATCH
 (Reporting by Jennifer Kwan; editing by Jeffrey Hodgson and
Rob Wilson)


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