PREVIEW-Canada seen adding 15,000 jobs in January

WHAT: Canadian January employment report

WHEN: Friday, Feb 5 at 7 a.m. (1200 GMT)

REUTERS FORECAST: The median forecast of 22 analysts is for
a net gain of 15,000 jobs in the month, following an unexpected
loss in December of 28,300 jobs, according to revised data
released last week. Forecasts range from -15,000 to +45,000.

The median forecast for the unemployment rate is 8.5
percent, up from 8.4 percent the previous month. Forecasts
range from 8.3 percent to 8.7 percent. [ECI/CA]

FACTORS TO WATCH: The employment situation in Canada has
stopped deteriorating over the past several months but has not
necessarily shown signs of growth as monthly results have been
unpredictable and choppy. There was a net job gain in the
fourth quarter but only because hefty hiring in November
outweighed job cuts in both October and December.

Revisions to historical employment data, released on
Friday, showed bigger job losses in December and a smaller net
job gain overall in the fourth quarter than originally reported
by Statistics Canada, although the general trend of
stabilization was unchanged. Statscan cut the December jobless
rate to 8.4 percent from 8.5 percent. [ID: nN29201456]

The number of jobs in the economy is still almost 2 percent
lower than the peak in October 2008 and economists say they
need to see more consistent signs of employment growth to
conclude the economy is fully on track to recovery.

Sectors watched most closely include the hard-hit
manufacturing and trade industries, which could provide clues
about the breadth — or lack thereof — of the economic rebound
because they are the ones with more catching-up to do. Some of
the other jobs being created, such as in construction, may be
short-term ones resulting from fiscal stimulus projects.
Services jobs were largely unscathed during the recession.

Because Canada’s economy is so closely intertwined with
that of the United States, economists suspect the spectacular
U.S. growth rate in the fourth quarter — 5.7 percent on an
annual basis — may boost the job market north of the border in
early 2010.

MARKET IMPACT: Another month of unexpected job losses could
lead investors to doubt the strength of Canada’s recovery or
fear a double-dip recession, triggering a selloff in the
Canadian dollar.

Surprisingly strong job growth could lead to speculation
the Bank of Canada will react sooner to raise interest rates,
perhaps as early as July. As a result, the Canadian dollar
could strengthen against the U.S. dollar and bond prices fall.

The Bank of Canada in January upheld its commitment to hold
its key interest rate at its lower limit of 0.25 percent until
the end of June, unless inflation suddenly appears headed to
soar past the bank’s 2 percent target.

Investment Tools
(Reporting by Louise Egan; editing by Peter Galloway)

PREVIEW-Canada seen adding 15,000 jobs in January