WHAT: Canadian November employment report
WHEN: Friday, Dec. 3 at 7 a.m. (1200 GMT)
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]
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)