It’s all about politics in Canada next week with few economic releases on the docket, but two provincial elections on tap. The U.S. will pick up the slack, with a heavy schedule of economic news.

RBC Financial says that the data focus this week will be the July GDP report on Tuesday. “We expect a 0.3% increase in growth for the month on the back of some better than expected economic data during the month,” it says. “As such, this will likely be the best performance the Canadian economy has seen since back in January when real GDP grew 0.5%. July’s gain should confirm that the slight contraction in economic growth during the second quarter was likely more of a one-time event than a dominant theme.”

BMO Nesbitt Burns also expects GDP growth of 0.3%, and it says that the risks are to the upside. “Manufacturing rebounded on a snap-back in auto production, auto sales were very strong, and housing had a typically great month. The sour notes were a drop in employment and very soft tourism activity across the country. This will not be enough to offset the big gains elsewhere,” it forecasts. “Even with the strong start to the quarter, growth for all of Q2 will struggle to hit 2.5%, or less than half the U.S. pace, as GDP was dragged back down in August by the blackout.”

CIBC World Markets says that it is expecting a fairly healthy gain reported for August GDP, in line with earlier gains for retailing and manufacturing. “The Q3 growth is coming off a very depressed second quarter pace, and partly reflects the one-time rebound from SARS and other shocks that hit the economy this spring, and the pull from a roaring pace south of the border,” it says. “Markets will want to see employment data due the following week before taking short-term interest rates very far in either direction.”

The July GDP report may be overshadowed by elections, in PEI on Monday, and in Ontario on Thursday. CIBC says that the market focus has been on the potential for a post-election revision to the balanced-budget forecast in the Ontario election.

Nesbitt notes that analysts have suggested Ontario’s finances are in deficit this year, with estimates ranging from $2 billion to $4.5 billion. “In fact, a new government would likely front-load as much bad fiscal news as possible, so the reported gap could potentially be even higher,” it warns.

This week will bring plenty of U.S. economic data for markets to feast on. Things get rolling on Monday with August’s personal income and expenditure report followed on Tuesday by the Chicago Purchasing Manager’s index for September.

On Wednesday markets will be closely watching the ISM factory survey for September.

The most anticipated release this week will likely be Friday’s employment report for September. “Markets expect to see a slight contraction in jobs on the back of a 93,000 jobs lost in the previous month,” says RBC.

CIBC suggests that the busy data week could leave the U.S. economic picture very much where it has stood throughout the third quarter. “Growth indicators like the ISM factory survey and August consumption look reasonably healthy. But the labour market is still anything but, and that’s holding back consumer confidence,” CIBC says.

Nesbitt says that ISM may prove the week’s most important market mover. It expects it to signal solid expansion. “These surveys are critical figures because some high frequency weekly data recently suggested slowing. If ISM surveys confirm that downtrend, expectations for a solid expansion will suffer a serious blow.”

As for the jobs report, Nesbitt resists making a firm call. “We will firm up our estimate based on key surveys that come out during the week. For now, we are penciling in a 10,000 decline in jobs, along with a tick up in the unemployment rate and subdued wage gains.”

The only earnings report scheduled is Richelieu Hardware Ltd., which releases its numbers on Tuesday.