Forex Investment and Currency Trading

Canadian Economic Data and Events         

• Net Change in Employment  
• Unemployment Rate
• Ivey Purchasing Managers Index    

The July employment report saw the stunning 55,000 decline in employment in the month. Expectations had been for generally flat growth consistent with minimal gains in overall GDP growth in recent quarters. The decline was skewed towards an outsized 48,000 drop in part-time work with full-time employment down a more modest 7,000. For August it is assuming that some of the weakness in part-time employment reverses and contributes to overall employment rising 15,000 in the month. The other major surprise in the July release was, despite the plummet in employment, the unemployment rate still managed to move down by 0.1 percentage point to 6.1% reflecting an even greater drop in those individuals leaving the labour force. It is assuming that some of this oversized drop in the labour force will be reversed in August sending the unemployment rate back up to 6.2%

US Economic Data and Events       

• Change in Nonfarm Payrolls          
• Unemployment Rate            
• Change in Manufact. Payrolls         
• Average Hourly Earnings MoM                   
• Average Hourly Earnings YoY
• Average Weekly Hours      
• Fed’s Yellen speaks in Los Angeles on U.S. Economy  

One of the best leading indicators that we have for the payroll employment number is the level of jobless claims. Looking at the four-week moving average for this measure that coincides with the payroll survey period, it indicates that claims jumped from 378,000 in July to 446,000 in August. Historically, this rapid deterioration would imply that the pace of employment declines has likely quickened to above the 100,000 mark. However, a component of the rise is thought related to the introduction of a federal program that extended unemployment insurance benefits for an additional 13 weeks for eligible individuals. Implementing this program reportedly resulted in an unexpected bump up in the number of new applicants starting the end of July. Further muddying the waters is the fact that seasonally adjusting weekly jobless claims through July and August requires sizeable seasonal factors because of summer shutdowns in the auto sector to allow for retooling for the new car lines. The seasonal factors in recent years reflect an expected pattern for the unadjusted data of a sharp rise in claims from auto workers through most of July with this increase being retraced starting the end of that month and continuing through August. Any transitory changes to the unadjusted data through these months can result in exaggerated movements in the seasonally-adjusted series. The decline in August employment of  -80,000 assumes that the jump up in claims, though overstated because of these factors, does reflect some fundamental weakening in labour markets. This is consistent with the expectation that GDP growth moderates over the second half of this year after the bounce higher in Q2. The unemployment rate in August is expected to hold steady at 5.7% despite an expected further weakening in employment growth in the household survey as some retracement is expected in the surprising jump in the labour force that occurred in July.