The most important report of the week comes out Friday — the U.S. non-farm payrolls report for January.
The December report helped spark a positive start to 2012 trading on North American stock markets when it showed the American economy created about 200,000 jobs that month. The good news helped launch a month-long rally that has left the Toronto Stock Exchange set to exit January up more than four per cent.
The December jobs showing capped a six-month stretch in which the U.S. economy generated 100,000 jobs or more in each month. That hadn't happened since 2006.
But economists say the economy will be hard pressed to come up with an equally strong number for January.
"I think 200,000 might be pushing it, to be honest," said CIBC World Markets economist Andrew Grantham.
"We’ve had a shift in seasonality within the transportation and storage sectors, which saw an outsized gain of 50,000 jobs in December."
He expects that the U.S. economy will have created 170,000 jobs this month, a figure that is actually higher than the consensus which calls for 150,000 jobs.
In Canada, economists expect that about 20,000 jobs were created in January, about the same as in December.
Warmer winter weather in many parts of Canada likely benefited the construction industry while manufacturing likely saw support from strong U.S. auto sales.
The other major report for Canada this week is the November reading on economic growth, due Tuesday. A rebound in consumer demand likely helped the Canadian economy expand by about 0.2 per cent.
Stocks had a weak session on Friday after data showed that the American economy expanded at an annualized rate of 2.8 per cent, better than the 1.8 per cent pace in the third quarter but short of the three per cent rise markets had expected.
Corporate earnings reports have also encouraged traders in January, even though performance has been a bit weaker.
"The earnings season has been decent," observed Chris Kuflik, wealth adviser with ScotiaMcLeod in Montreal.
But he pointed out that S&P 500 companies in the U.S. beating earnings expectations are down this quarter.
"Instead of being in the high 60s as they were last quarter, they’re running at about 59 per cent, but there is still time."
In Canada, investors will be looking to the energy sector for earnings from three heavyweights — Imperial Oil (TSX:IMO) hands in results Tuesday while Suncor Energy (TSX:SU) and Canadian Oil Sands (TSX:COS) report on Wednesday.
Kuflik expects a positive season from the sector, particularly as oil prices firmed over the last two months, holding steady around the US$100 a barrel level.
"I would think the oil and gas sector as a whole should be OK, particularly those companies focused more on oil, it should be good for them," he said.
"Those companies that have a lot of natural gas exposure in the energy sector will suffer because that side of the business is terrible. There’s just way too much supply and it still is a continental commodity. Once we can get the stuff off of this continent, they’re off to the races."
Natural gas futures recently fell to their lowest levels since 2002 with prices under severe pressure from milder-than-normal weather in the U.S. Northeast and Midwest.
It is also a busy earnings week in the U.S. were traders will hear from ExxonMobil and United Parcel Service on Tuesday, QuallComm on Wednesday and Merck and Co. and Dow Chemical on Thursday.