Canada: Economy is forecasted to add 10k jobs in August – TDS

The Canadian economy is forecast to add 10k jobs in August, little changed from the prior month but subdued in comparison to the lofty pace in Q2, according to analysts at TDS.

Key Quotes

“Job growth should skew towards public and private employees, which would coincide with a pullback in self-employment after a strong two months. Last month's 35k gain in full time employment was in line with the six-month trend and while we could see some moderation from these levels, there is no catalyst to suggest an outright correction.”

“The unemployment rate should hold steady at 6.3%, a record low for the current cycle, though the risks lean towards a 6.4% print should last month's pullback in labour force participation correct. Wage growth, currently sitting at a subdued 1.2% y/y, should a modest pickup on the heels of the tightening in labour market conditions and muted base-effects from last August.”

“Foreign Exchange: The BoC’s statement shifted the burden of proof back on the data. True, Canadian data momentum has softened a touch against the trend, but the momentum of growth revisions and some of the key “hard” data surprises have benefitted CAD. With the bar for another hike this year quite low, we expect an increase in CAD’s sensitivity to key data releases. Our expected headline miss of 5k translates into a 0.4 sigma downside miss, which is unlikely to derail CAD if accompanied by a modest acceleration in wages and steady growth in employment. Notably, a 0.4% downside miss has led to a flat market reaction in CAD so given the scope for another rate hike this year, we expect another push lower in USDCAD and a break of 1.20 shortly.”

“US: Wholesale trade for July is the lone data release. The market expects wholesale sales to rise by 0.5% m/m while wholesale inventories should remain unrevised from the preliminary reading of 0.4% m/m. Philadelphia Fed President Harker will give a speech on consumer finance at 8:45 ET.”