PREVIEW-Canada seen adding 25,000 jobs in April

WHAT: Canadian April employment report

WHEN: Friday, May 7 at 7 a.m. (1100 GMT)

REUTERS FORECAST: The median forecast of 23 analysts is for
a net gain of 25,000 jobs in the month, following a modest gain
in March of 17,900. Forecasts range from 10,000 to 50,000.

The median forecast for the unemployment rate is 8.2
percent, unchanged from the previous month. Forecasts range
from 8.1 percent to 8.3 percent. [ID:nECICA]

FACTORS TO WATCH:

Recovery: Even though policy makers warn there is still
considerable slack in the economy and that fiscal woes in
Europe cloud the horizon, the Canadian economy is recovering
much faster than anyone predicted. This could nudge businesses
into more hiring, bringing the number of employed closer to
pre-crisis levels.

The job market has been recovering steadily since last
July, but as of March had recovered less than half the jobs
lost during the recession.

The economy expanded a healthy 0.3 percent in February, the
sixth straight monthly increase, and appears on track to meet
the Bank of Canada’s projected 5.7 percent annualized growth in
the first quarter. Both the central bank and the government
have raised their forecasts for 2010 growth to 3.7 percent and
3.1 percent, respectively.

Business investment: The Bank of Canada judges that
business investment levels will start recovering as of the
current quarter. Its first-quarter survey of senior business
managers showed companies have firm intentions to expand their
workforces over the next year as a result.

Sectors: Private sector job creation has begun to catch up
to the public sector, which has done most of the hiring so far
in the recovery.

Similarly, an upturn in the goods-producing industries will
also be taken as a positive sign that manufacturers are getting
back on their feet even as the strong Canadian dollar hampers
export business.

MARKET IMPACT:

Weaker job gains than forecast, or even a flat or negative
result, could lead investors to doubt whether Canada’s recovery
can withstand the withdrawal of extraordinary stimulus
measures, triggering a selloff in the Canadian dollar. It may
lessen expectations for a June 1 interest rate hike by the Bank
of Canada.

Surprisingly strong job growth could increase expectations
the central bank will raise its overnight interest rate on June
1 rather than wait until July or later. As a result, the
Canadian dollar could strengthen against the U.S. dollar and
bond prices fall.

The Bank of Canada on April 20 withdrew its conditional
commitment to keep rates at an all-time low of 0.25 percent
until the end of June, which it said amounts to a tightening of
monetary policy.

Investment Basics
(Reporting by Louise Egan; editing by Rob Wilson)

PREVIEW-Canada seen adding 25,000 jobs in April