TORONTO – A mix of the latest domestic jobs report and a flood of Canadian earnings will provide much of the motivation for traders in what’s otherwise a relatively calm week for data.
After the most recent dismal employment numbers, questions about how much the economy is struggling will be at the forefront, as the stumble that characterized the back half of last year remains fresh.
Canada experienced the worst jobs performance in almost four years in March as 54,500 workers joined the ranks of the unemployed, all full-time and all in the important private sector.
Consensus expectations suggest the economy will add about 11,000 jobs in April when the numbers are reported on Friday, though pessimism still keeps expectations low.
“We’re looking for the employment numbers to come in on the soft side of consensus,” said CIBC economist Emanuella Enenajor, who predicts about 5,000 jobs will be added.
“Given that markets have had a spate of good news in the last week or so, as well as positive momentum on the resource price side, this could actually come as a little bit of a negative for the Canadian dollar.”
The loonie inched closer to parity last week, closing at 99.23 cents US, as traders moved into risk-based currencies after the surprising U.S. jobs numbers on Friday.
The U.S. Labor Department said employers added 165,000 jobs in April, while both February and March numbers were also better than first thought. The combination trimmed the U.S. unemployment rate to a four-year low of 7.5 per cent.
After the jobs report, the Dow raced above 15,000 for the first time and the Standard and Poor’s 500 index, a broader market measure, broke through 1,600. Both pulled back from their highs of the day, but still closed at new records.
It remains to be seen whether U.S. stock markets can maintain that sort of momentum in a week when no major economic data will be released.
In Canada, a long list of major companies are set to report their earnings, including WestJet (TSX:WJA.A), Kinross Gold Corp (TSX:K) and George Weston Ltd. (TSX:WN) on Tuesday.
Fertilizer company Agrium (TSX:AGU) reports on Wednesday while BCE Inc. (TSX:BCE) and Telus (TSX:T) issue their results on Thursday.
“We need two things in a company’s earnings — better profits and revenues,” said portfolio manager Adrian Mastracci of KCM Wealth Management
“We’re getting the profits mainly through cutting expenses, but we’re not getting much revenue upside. That’s a bit of a worry because if a company cannot grow their top line, the margins begin to shrink and (then) it’s tough to grow every quarter.”
Also on the calendar are new housing starts in Canada, due on Wednesday morning, which should show whether residential construction is demonstrating further signs of a slowdown.