After Friday’s extremely weak jobs report in the U.S., traders will be watching the data closely this week for clarification of the economic situation. Recession or no recession, that is the question.

The big report this week in Canada is likely to be our own jobs report on Friday. Before that, building permit numbers are out today, and Tuesday will see housing starts data.

Despite last Friday’s extremely weak employment report in the U.S., economists are still calling for 10,000 new jobs in Canada, with the unemployment rate holding steady at 7%. BMO Nesbitt Burns sees the jobless rate creeping higher to 7.1%.

“In Canada, April’s sunny weather may have helped the housing starts. But the U.S. jobs bombshell doesn’t bode well for Friday’s report on employment trends in the sliver of the North American economy that lies on the northern side of the border,” CIBC World Markets says. “That said, while annual job trends are reasonably correlated, the monthly gains in losses aren’t as tightly linked. Canada could still see some modest employment increases, but a further rise in the unemployment rate should be supportive for fixed income markets.”

The U.S. will see some data mid-week, including non-farm productivity and unit labour costs on Tuesday. However, the more important data is out Friday, when retail trade, the Producer Price Index and consumer sentiment numbers for April are out. CIBC suggests, “In the U.S., recession worries will linger in the week ahead as retail sales gains look soft in April, particularly if much of the gain is driven by higher gasoline prices rather than real volumes.” Higher gas prices aren’t expected to boost the PPI much though, as weaker growth absorbs the increase.

The other items of interest this week will include U.S. Federal Reserve Board chair Alan Greenspan speaking on Thursday, and on Wednesday, Ontario’s finance minister Jim Flaherty will introduce his first budget. “With Ontario’s economy feeling the brunt of the U.S.-led slowdown in autos and high-tech, the focus of Flaherty’s first budget is likely to be on spending restraint. Faced with less buoyant economic conditions, new tax relief may be quite modest in this year’s plan,” says BMO.

CIBC concludes that stocks may suffer this week, noting, “The asset shift out of bonds and into stocks look to have run out of steam in the past week, and the week ahead could begin to see a further return to favour for bonds as investors turn cautious on the outlook for profits.”

The earnings schedule looks rather muted. Tuesday will see ARC Energy Trust, Oxford Property, Ritchie Bros., TVX Gold, Uni-Sélect Inc. and Wajax Limited reporting. On Wednesday, CAE Inc., CHIP REIT, Four Seasons Hotels, Gulf Canada, Molson Companies, NAL Oil & Gas Trust and Trizec Hahn are due.

Thursday will see Finning International Inc. and Residential Equities REIT announcing their results. On Friday, Microcell Telecommunications and PrimeWest Energy Trust will report.