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Preview: Canada seen adding 25,000 jobs in April

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. 


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.


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. 

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