By Theresa Sheehan
PRINCETON (SMRA) – The high point of the week ahead will be the
employment report Friday, but the overall sense of anticipation for
the week’s data is tame. The steady feed of reports over the week has
few standouts, and will mainly serve to flesh out what is already known.
Federal Reserve officials will be silent during the week as the
Federal Open Market Committee meeting approaches. Congress will be
finishing up before the summer recess starts August 9. The U.S.
Treasury’s quarterly refunding will be held on Wednesday. Earnings
season continues with a multitude of reports.
Combine the usual slow summer appearance schedule for Fed officials
with the traditional press blackout period in advance of an FOMC
meeting, and there is a very blank calendar indeed. It is likely to
remain so until after the annual Jackson Hole forum late in August.
There is a cluster of central bank meetings over the next two
weeks. The Reserve Bank of Australia August 3, the Bank of England
August 4 and 5, the ECB August 5, the Bank of Japan August 9 and 10, and
the Federal Reserve August 10. No change in policy or rates expected in
the near-term at any of these.
The July report on U.S. payrolls and unemployment Friday morning
promises to be a disappointment — similar to the June release. Then, a
modest increase in private payrolls was reported, along with a hefty
drop in government jobs due to an unwinding of the temporary Census
hiring, and a lower unemployment rate as the number of unemployed
dropped due to expiration of unemployment benefits. This should persist
into July.
Leading up to the employment data are a series of smaller reports.
The foremost of these is the ADP National Employment Report for July
Wednesday morning. This indicator can track the payroll data fairly well
in normal circumstances, but with the distortions from the Census hiring
and special factors causing swings weekly initial jobless claims, it has
been less useful of late.
The Challenger report on layoff intentions for July also Wednesday
morning could be a little higher, mainly due to increased job cutting in
government. There have also been some layoffs announced related to cost
cutting and consolidation in some industries. Nonetheless, the levels
are likely to remain low relative to the series history.
The Monster.com Employment Index is set for release in the early
hours of Thursday. Recently, it has shown some strength and offers the
prospect of continued improvement in the labor market, especially for
skilled workers.
Mid-morning Monday, the ISM releases its manufacturing index for
July, followed by the non-manufacturing index same time Wednesday. The
employment components of both will figure into last-minute adjustments
for expectations for the employment report. But both will also important
to markets for any sign that the factory or service sectors are showing
further softening.
Personal income and spending for June Tuesday morning should show a
further trend of modest gains in wages and salaries, and some increase
in consumer spending.
The last few reports associated with the housing market for June
will be released this week. The data on construction spending
mid-morning Monday will not have much new to say about private
residential building except for the calculation that shows spending on
renovations and repairs. Public spending will probably be slowing as the
fiscal stimulus monies continue to dwindle.
The NAR’s Pending Home Sales Index for June later Tuesday morning
should stabilize after plunging in May as the deadline had passed for
contracts to meet requirements in the homebuyer tax credit program.
However, the readings will be back to levels more consistent with a
stagnant housing market.
Sales of domestically produced motor vehicles in July will be
released on Monday as available. The units sold will probably be above
to the 8.4 million SAAR of June. Industry same-store sales comparisons
are scheduled for release on Thursday, and will probably be consistent
with consumer activity during hot weather with demand summer items, but
little for new fall merchandise.
Factory orders for June mid-morning Tuesday could be down for a
second month in a row, signaling some further softness in manufacturing.
The durable goods report for June was already reported down 1.0%, and
nondurables orders are likely to be about flat. However, it is possible
the durables component could be revised higher, and if so, will put a
better complexion on conditions in manufacturing.
Consumer credit outstanding for June published Friday afternoon is
mainly a footnote to the week. Consumers remain wary of taking on new
debt or adding to existing lines of credit, and lenders are cautious in
issuing any new loans.
The quarterly refunding announcement will take place on Wednesday
morning, to be preceded by the release of the quarterly borrowing
requirements on Monday afternoon. The refunding package will include new
3- and 10-year notes, and 30-year bonds, to be auctioned the subsequent
Tuesday, Wednesday, and Thursday, respectively.
A multitude of earnings reports are on the calendar, but fewer of
the big names are in the pack. Nonetheless, there are some notable
companies still to report.
Monday, the companies include BNP Paribas, Celadon Group,
Chesapeake Utilities, Fannie Mae, Freddie Mac, HSBC Holdings, Kaiser
Aluminum, and Sotheby’s.
Tuesday’s reports include Archer Daniels Midland, BMW, Clorox,
Coach, Dole Food, Duke Energy, Electronic Arts, Inland Real Estate,
Lear, Marathon Oil, MasterCard, OfficeMax, Pfizer, Pitney Bowes,
Priceline.com, Procter & Gamble, Dow Chemical, Unum Group, and Whole
Foods.
Wednesday, reports are expected from Hughes Communications, News
Corporation, Owens Corning, PG&E, PulteGroup, Societe Generale,
Allstate, Hanover Insurance Group, Time Warner, Toyota, and TRW Auto.
Thursday, the pace slows down but a number of major earnings
reports are expected including; Cigna, Ethan Allen, Hyatt Hotels, Kraft,
Novo Nordisk, Unilever, Viacom, and Walt Disney.
By Friday the number of reports are a comparative trickle, and
include Harleysville and The Washington Post Company.
** Stone & McCarthy Research Associates **
[TOPICS: M$$FI$,M$U$$$,MAUDS$]
