Alan Greenspan and David Dodge will share the spotlight this week, but investors in Canada will probably be more pleased with what their respective central bank head has to say.
The pronouncements by the two central bankers dominate the economic calendar, although labour-force surveys on both sides of the border will also command attention.
Bank of Canada Governor Dodge will no doubt have the more pleasant task when he speaks in Ottawa on Friday. With the first quarter expected to come in a bit stronger than expected, Dodge may have some positive comments about the domestic economy.
Federal Reserve Board chairman Greenspan’s offering on Tuesday from the FOMC meeting won’t be as upbeat — he’s widely expected to raise interest rates by a quarter of a point. Economists will be reading closely Greenspan’s post-meeting comments, but as many central bank watchers note, the detailed minutes of the meeting that are made public later in the month now tend to be where the real clues are about the economy’s direction.
“The last meeting added a hint of worry on inflation—this one could add some new talk about slower growth,” says CIBC World Markets Inc. senior economist Avery Shenfeld. “But, a reasonable dose of job creation in April will remind some gloomy equity investors that the economy still has sparks of life.”
Of Canada’s situation Shenfeld says: “Moderate job gains in April will continue this year’s softer labour market picture, a big reason, along with news of a U.S. slowdown, why Governor Dodge can’t act on his tightening bias. Still, we expect him to give an upbeat view on growth in his talk on Friday, with Q1 looking to come in a tad better than the Bank’s first half average growth call.”
From a hard data standpoint, the week ahead in Canada is fairly quiet. There are no economic releases until Thursday when building permits for March are out as well as the April Ivey Purchasing Managers Index, which measures month-to-month changes in dollars of purchases as indicated by a panel of purchasing managers from across Canada.
On Friday, aside from Dodge’s speech, the April unemployment rate will be released. It stood at 6.9% for March and the market consensus is that it will stay there in April. CIBC WM economist Warren Lovely is a tad more bearish, calling for a 7% jobless rate.
“Canada’s labour market hasn’t gotten off to a great start in 2005,” Lovely says in a report. “Jobs are hard to come by, averaging just 8,000 a month in Q1, and overall employment quality has suffered … We don’t look for things to get too much better in April, where a limited 14,000 employment increase would push the jobless rate up a tick to 7%.
In the U.S., the calendar is busier, with the ISM Manufacturing Survey, a measure of expansion, on Monday and factory orders on Tuesday. The ISM non-manufacturing survey comes out Wednesday, with non-farm productivity on Thursday expected to show first-quarter moving slightly ahead of that in the fourth quarter of 2004 at a year-over-year rate of 2.7%.
Greenspan will be back in the news on Thursday when he speaks the Chicago Fed’s bank structure conference.
Non-farm payroll figures and the unemployment are due Friday. Economists are looking for April’s rate to be the same as March, at 5.2%.
It’s earnings season and the list for the week is long. Among the companies reporting is IGM Financial Inc. on Friday.
Week ahead: Greenspan, Dodge in spotlight
- By: James Walker
- May 2, 2005 May 2, 2005
- 07:30