The flow of economic data will be very light in Canada this week, but there will be plenty of earnings releases and U.S. data to keep market watchers busy.

RBC Financial says that with the light slate in Canada, the focus will be upon important updates on the U.S. economy and their impact upon overall North American markets.

“The Canadian week starts with employment, earnings and hours for the month of May, followed by industrial product prices on Tuesday. Wednesday sees the most important release of the week which is May’s monthly real GDP by industry which will provide us with two-thirds of the second quarter’s worth of overall economic activity,” RBC says. The week ends with the business conditions survey for the third quarter from Statistics Canada.

CIBC World Markets agrees that Canadian GDP will be the most important release. “On the heels of April’s SARS-related slippage, the best the economy looks to have managed is a tepid 0.1% increase. Back-to-back weak reports, combined with a poor lead-in to the quarter, means Q2 will be hard pressed to churn out much in the way of real GDP growth,” it says.

BMO Nesbitt Burns echoes CIBC’s 0.1% prediction. “The combination of the April setback and the modest gain in May suggests that GDP for all of Q2 will be close to unchanged, with a lingering possibility of an outright decline,” it notes. “This will be no surprise to the Bank of Canada — they called for zero growth in their recent Monetary Policy Report update. The final tally for Q2 will be available at the end of August, just days before the Bank next decides on interest rates on September 3.”

As for the other releases, CIBC notes that June industrial product prices are set to rise, “although there remains precious little evidence of upstream core inflation pressure here”. And, it says that Friday’s survey of manufacturers will be worth a look, “as it lays out the expected track for Q3 production and employment for this key cyclical industry.”

Nesbitt expects an improvement in the StatsCan Business Conditions Index. “Given an uptick in the U.S. manufacturing surveys in recent months and an improving outlook on Canadian capital spending, we would expect some modest improvement in the latest BCI,” it says. “However, business sentiment surveys have also darkened recently, suggesting the index will remain well south of the 50-mark in Q3.”

As for the U.S., RBC says that this week brings a number of market moving data releases. Although Monday will be quiet, updates on consumer confidence from the Conference Board and the ABC/Money Magazine survey will be released on Tuesday, as will weekly retail chain store sales.

Wednesday brings the Fed’s Beige Book, and the Chicago Fed’s National Activity Index.

“Thursday is critically important to markets,” RBC says, “with the advance Q2 GDP numbers being released along with the Chicago purchasing managers’ index and weekly initial unemployment claims.”

On Friday, there will be updates on job growth in July, the final version of the University of Michigan’s consumer sentiment survey for July, the Institute for Supply Management’s July manufacturing index, personal income and spending in June, vehicle sales in July, and construction spending for the month of June.

“Thursday’s Q2 real GDP numbers and Friday’s payrolls will vie for market attention in an action-loaded economic calendar,” says CIBC. “The bond market’s bears will be scrutinizing the GDP and payrolls tallies for signs of unanticipated resilience in the wake of Friday’s strong durable goods survey. Our below consensus calls for both reports should, however, provide some needed comfort to fixed income markets. A somewhat firmer-than-consensus ISM later on Friday could hurt bonds, while encouraging equities.”

Nesbitt says that it is looking for the Q2 GDP report to set the stage for a strong second half by revealing decent growth in final sales to domestic buyers, offset by inventory cuts and imports. “If you bear in mind the size of the stimulus package being applied and flip inventories into the plus column, so that stocks can make up lost ground to sales, the picture will look good.”

The full schedule of U.S. data will be matched by a continuing strong flow of earnings reports, led by Barrick Gold on Monday. Barrick will be joined by Aur Resources, Bell Nordiq Income Fund, Cambior Inc., Phelps Dodge and Slocan.