Canadian Manufacturing

Surprising U.S. job creation lag impacting Canadian supply chains…again

The pace of the American economic recovery is sending commodity prices lower.



TORONTO—The Toronto stock market lost ground for a fourth session Monday after a big disappointment on U.S. job creation raised worries about the pace of the American economic recovery and sent commodity prices lower.

The S&P/TSX composite index was 70.3 points lower to 12,032.8 while the TSX Venture Exchange dipped 17.04 points to 1,464.

Here are some specific market details:
The base metals sector was off 1.44 per cent
The energy sector 0.6 per cent lower with the May crude contract on the New York Mercantile Exchange down $1.85 to US$101.46 a barrel.
Blue chips also gave up ground as the financial sector lost 0.86 per cent.
The industrial sector down 0.6 per cent
TSX losses were limited by a 1.3 per cent rise in the gold sector as bullion prices advanced

The commodity-sensitive loonie was down 0.48 of a cent to 100.14 cents US.

New York markets were deep in the red after the U.S. Labour Department reported Friday, while markets were closed for a holiday, that the U.S. added only 120,000 jobs last month, widely missing economist expectations for gains of about 205,000.

The Dow Jones industrial index lost 151.78 points to 12,908.36.

The Nasdaq composite index dropped 37.46 points to 3,043.04 and the S&P 500 index slid 18.44 points to 1,379.64.

The data had been particularly surprising since the employment components in the Institute for Supply Management’s manufacturing and service sector indexes pointed to an improving labour picture, as did jobless insurance claims sliding to a four-year low recently. In addition, payroll firm ADP had forecast last week that the U.S. private sector created more than 200,000 jobs last month.

The resource-heavy TSX had run up almost 14 per cent from the lows of last October to the most recent highs of early March. But the rally has run out of steam amid worries about growth in China and other emerging economies.

The market has also been buffeted by worries about the European debt crisis and apprehension about the upcoming first quarter corporate earnings season, which starts this week in the U.S. where traders are braced for lower earnings.

China, in particular, has been an important force in helping the global economy recover from the 2008 financial crisis and recession. Its fast growing economy has had a huge appetite for commodities and this has benefited oil and metal prices and share prices of resource companies on the TSX.

But Chinese growth has slowed lately as the government deals with high inflation.

On Monday, the Chinese government reported that the country’s inflation rate edged up to 3.6 per cent in March over a year earlier. That was up from February’s 3.2 per cent but below the government’s four per cent target for the year as Beijing shifted from containing price rises to shoring up flagging growth in the world’s second-largest economy.


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