TORONTO - Jobs -- or more aptly a lack thereof -- will be top of mind among traders this week.
In the U.S., Americans are waiting to find out if Congress will pass President Barack Obama's jobs creation act.
North of the border, Canadians will be warily watching for signs of a continuation of the job losses the country suffered in August.
Economists expect a lull in jobs growth will continue in the coming months after a much weaker than expected report on Friday showed 5,500 jobs were lost in Canada last month. The consensus call had been for the creation of 25,000 net new jobs.
And those jobs figures from August, troubling as they were, did not reflect recent turmoil on the stock markets. which saw billions of dollars of Canadian investments wiped out, said TD Bank deputy chief economist Derek Burleton.
"We're only going to begin to see some of the confidence impacts on hiring in the coming months," Burleton said.
"We're looking at very minimal employment growth, something that's better than that August number, but by no means are we going back to the trend rates of employment growth that we've been seeing."
BMO Economics is forecasting that job growth will slow in coming months, averaging about one per cent in the year ahead, or 15,000 jobs per month.
Also on the jobs front, investors are focused on whether Obama's $447-billion plan for creating jobs will be approved by Congress.
It's not clear whether that can happen. Republicans control the House and many of them oppose any new spending. Some reacted by calling the plan a rehash of failed strategies.
Many economists say it's unlikely to pass in its current form and that any bill that does pass will likely contain smaller expenditures.
Kathryn Delgreco, vice-president at TD Waterhouse, said traders are likely to remain focused on the U.S. economy, but that any news one way or the other is likely to cause greater gyrations than during less volatile times.
Traders "are looking for what kind of time frame they can anticipate seeing the economy start to gain traction," Delgreco said.
Economic news set to come out of the U.S. this week includes data on retail sales -- which are expected to be hit by a lost weekend shopping due to hurricane Irene. Next week will also see the release of data on business inventories, consumer confidence and the key Philadelphia Federal Reserve Bank index, which measures changes in business growth.
Stateside reports will overshadow those trickling out of Canada, which include July manufacturing shipments -- expected to rebound given an uptick in exports that month.
Investors will also keep one eye turned to the Sept. 21 two-day meeting of the U.S. Federal Reserve, as some expect the U.S. central bank to introduce a third round of bond purchases, known as QE3, to help stimulate the economy.
Markets are looking for some sense that something that can be implemented "but I think everyone should have very modest expectations in terms of what they can do," Delgreco said.
Chris King, vice-president and portfolio manager at Meighen and Associates, said investors need to be a little more patient and realistic in their expectations for economic recovery.
"We need to stop this instant gratification of people and markets (and) focus on valuation ..."
"What's required is a passage of time to solidify consumers, the housing market and for people to put their fiscal houses in shape," King said.
Although the markets have fallen greatly in the past few months, the TSX is still up about 10 per cent from a year ago and company balance sheets and earnings are healthy, he said.
"The markets moved too far too fast last fall on euphoria that the recovery was here and it was strong," he said. "You just have to settle yourself for a little bit slower growth than you were expecting last fall."
Europe's woes will also continue to weigh on markets, especially after Friday's surprise announcement that Juergen Stark, part of the six-member governing board of the European Central Bank, was quitting for personal reasons. Stark had been a consistent critic of the ECB's bond purchase program.
