Forex Investment and Currency Trading

Friday, April 4, 2008

Canadian Economic Data and Events                                                                                  

• 07:00 March Employment Change                                          
• 07:00 March Unemployment Rate                                           
• 10:00 March Ivey PMI                                                              

Employment growth has remained resilient in Q1, soundly beating consensus estimates and averaging a solid 44.9K gain over the first two months of the quarter.  In March, market is expecting a moderation in employment growth, as it is unlikely that the volatile employment series would show another above-trend gain after two straight outsized increases. A moderation in employment would also be consistent with the view calling for another quarter of modest GDP growth.  In terms of the breakdown, further weakness in manufacturing employment is likely, as the negative factors confronting the sector have not abated.  Another decline in manufacturing employment would also be consistent with the Q1 Business Conditions Survey in which it was indicated that a greater portion of manufacturing firms were going to reduce their work force versus increasing it. Also, there could be a slowing in construction employment after two solid monthly increases given the inclement weather conditions observed in the month. 

The unemployment rate  is expected to have edged up to 5.9% from 5.8% in February, though it likely remained a only a touch above the historical low established in January and matched in February.  Growth in the average hourly earnings of permanent workers (closely monitored by the Bank of Canada) will also be watched by investors.  In February, this measure of earnings was up 4.7% relative to its year-ago level, which is a solid advance, especially given that prices were up a comparatively smaller 1.8% over the same period.  
 

U.S. Economic Data and Events                                              

• 08:30 March Non-Farm Payrolls                                             
• 08:30 March Unemployment Rate                                           
• 8:45 Cleveland Fed’s Pianalto speaks at Geography conference
• 14:45 Fed Governor Randall Kroszoner speaks at Miami IADB meeting  

Forecast calls for payrolls to have contracted by 35K in March, consistent with a pickup in initial jobless claims.  Initial jobless claims increased 9.6% between payroll survey periods.  In addition, regional manufacturing surveys released thus far have, on balance, suggested another dismal month for employment in the manufacturing sector, which will also be impacted by a strike at a parts supplier for GM and Chrysler.  Finally, the differential between the jobs-plentiful and jobs-hard-to-get indices in the Conference Board’s consumer confidence survey fell 8.2 points, suggesting marked weakness in the payroll data.          

The unemployment rate probably increased to 5.0% from 4.8%.  In February, there was an outsized 450,000 decline in the labour force which more-than-offset a contraction in employment in the household survey leading the unemployment rate to fall to 4.8% from 4.9% the month prior.  The massive decline in the volatile labour force series in February (the largest since 2003) is likely to be partially retraced in March.  This will contribute to an increase in the unemployment rate.  An uptick in the unemployment rate would also be consistent with an increase in the jobs-hard-to-get index in the Conference Board’s consumer confidence survey.