(Adds updated forecasts)
WHAT: Canadian March employment report
WHEN: Friday, April 8 at 7 a.m. (1100 GMT)
REUTERS FORECAST (preliminary):
March F'cast range Feb
Jobs gain/loss +26.5K +11.4K to +40K +15.1K
Unemployment rate 7.7 pct 7.6 to 7.8 pct 7.8 pct
For individual forecasts see: [ECI/CA]
FACTORS TO WATCH:
Trend: The report will show whether job growth remained lackluster for the second straight month or if there has been a return to the more frenetic hiring pace of December and January. The Canadian economy has created an average of 40,000 jobs per month for the past five months. But February's tepid gain disappointed after two strong months, so markets will be watching to see if the lull was temporary.
During the economic recovery Canada has generally regained lost jobs faster than the United States, but that trend may be reversing as the neighboring economy outperformed Canada in February and posted a second straight month of solid gains in March. [ID:nNOAT00477]
Growth: Economic growth picked up speed in the fourth quarter of last year and early data show that momentum spilling over into the first quarter of 2011, which should foster job growth. [ID:nN31223177]
Political fallout: Unemployment is a big theme in the federal election campaign now in full swing ahead of a May 2 vote, especially in the hard-hit manufacturing belt in southern Ontario, where the jobless rate was above the national average in February at 8.0 percent.
Wages: Annual wage inflation for permanent employees was 2.5 percent in February, up from 2.3 percent in January, according to Statistics Canada's flagship employment survey.
In a separate business census of non-farm payroll employees, Statscan estimated a 4.2 percent advance in weekly earnings in January from a year earlier.
The employment report is the last data point available to the Bank of Canada ahead of its April 12 interest rate announcement. While market players have effectively ruled out the chances of a rate hike this month, strong job numbers could convince investors to pull forward their forecasts on the timing of the next rate hike.
The Canadian dollar would likely get a boost from an upbeat report, or slip from recent highs if the numbers disappoint.
Canada's primary securities dealers, surveyed March 18, were largely split between May 31 and July 19 as the date of the central bank's next move, with one of the 11 betting on April 12. [CA/POLL]
Overnight index swaps, which trade based on expectations for the key central bank rate, imply a fully priced-in rate increase on the bank's Sept. 7 decision date. BOCWATCH (Reporting by Louise Egan; editing by Jeffrey Hodgson)