Once again the war will probably dominate market attention this week, but there will be some potentially decent economic data out, too.

Canadian GDP for January leads off the week, followed by the help-wanted index on Tuesday, Nova Scotia’s budget is due Wednesday, and Friday brings a jobs report.

CIBC World Markets says that strong results for manufacturing and wholesaling will drive a 0.4% rise in January GDP, getting the quarter off to a good start. “That, however, follows on the heels of two tame 0.1% gains to close out Q4,” it notes.

“Although quite dated, this report is likely to reveal that the Canadian economy started the year on a very firm footing,” predicts BMO Nesbitt Burns. “After posting average monthly GDP gains of just 0.1% in the final four months of 2002, it appears to have posted a solid 0.4% advance in January. Manufacturing shipments and wholesale trade notched up strong gains, while ex-auto retail sales were sturdy, compensating for a dip in housing starts and flat employment. The flying start to the year is likely to give way to considerably more subdued activity in the next few months, but will be enough to generate growth of around 2.5% (annualized) for the first quarter as a whole.”

The jobs report will be closely watched. CIBC bravely predicts that February’s outsized jobs gain sets the stage for a more moderate pace in March. Consensus estimates are pointing to a net gain of 15,000 jobs, on the heels of January1s outsized 55,000-position increase. However, economists have been wrong to the downside on this number for over a year now.

BMO also sees a weaker number, saying, “In the current economic backdrop, we simply doubt that anything close to these gains can be sustained, and look for job growth to cool to around 15,000 for March. Manufacturing would appear to be particularly vulnerable in the face of softer U.S. auto sales, a rising Canadian dollar, and still-high energy costs. However, construction could see a bounceback from the miserable weather conditions in February.”

BMO says that the jobless rate is expected to hold steady again at 7.4% for the third month in a row, down from 7.7% a year ago.

This jobs number will be the last big one that the Bank of Canada has to think about as it prepares for its April 15th fixed announcement date.

“We continue to believe that the Bank will keep rates on hold in April, given the high degree of volatility in financial markets engendered by events in the Middle East,” TD Bank says. “That trend persisted this week, with oil prices spiking back up on fears of reduced supply out of Iraq, equity markets losing ground, and the U.S. dollar taking a hit against a wide range of currencies – including the Canadian dollar, which rallied back above US68 cents. However, the pause will be only temporary, with the Bank resuming its rate hikes in June, delivering another 100 basis points of tightening by year-end.”

In the U.S., the Chicago purchasing managers index is due out on Monday. RBC Financial says that more important data comes out on Tuesday with the release of the March Institute of Supply Management report. On Wednesday, factory orders numbers are out. The ISM non-manufacturing index comes out on Thursday. But the big number will be the U.S. jobs report on Friday.

“In the US, the only real positive about economic data in the coming week will be the fact that everyone already expects bad news,” says CIBC. “Other data suggest that purchasing managers will report declining factory activity in March, while consensus expectations for payrolls build in a further drop after February’s stunning weakness. A factory orders decline was already well-telegraphed in the durables declines reported this past week. If the numbers are no more gloomy than expected, the market focus will remain largely on the war.”

BMO notes that leading employment indicators have not improved materially in March, a month when geopolitical uncertainty probably caused businesses to delay decisions when possible.

“So, all the employment report has going for it is the depth of the decline in February. We believe the 300,000+ drop last month overstated employment weakness and look for a modest 100,000 bounceback in March, led by weather-sensitive components, but leaving the trend decidedly in the downward direction. Unemployment is likely to tick up 0.1% for the month.”