By Theresa Sheehan
PRINCETON (SMRA) – The final days of August tend to be among the
quietest on the economic data calendars, but this year the timing of the
employment report brings the other data into high relief.
The week leads up to the unofficial end of summer with the Labor
Day holiday. Markets will not officially close early on Friday, but most
market desks will have only a skeleton staff after the release of the
employment numbers.
A busy schedule of data releases boils down to the employment
report Friday morning. It would seem that another month of
disappointing data is in the offing. An early survey median is for a
decline of 110,000 in August.
Much of the decline is expected to be due to decreases in
government workers, particularly from the long-anticipated departure of
still more temporary Census workers. The survey median for private
payrolls anticipates a rise of around 50,000.
Continued lackluster growth in private payrolls remains a concern
for Fed policymakers, especially as the unemployment rate is likely to
tick higher, perhaps helped by the availability of renewed jobless
benefits to the long-term unemployed, extended in late July.
Leading up to the employment data release are a variety of reports
that will feed into last-minute expectations.
The ADP National Employment Index for August is at 8:15 ET on
Wednesday. In the last few months it has lined up better with private
payrolls than for total nonfarm payrolls due to the presence of those
Census workers in the government jobs count. However, it still has had
to contend with some technical factors that have elevated initial claims
during the survey comparison week.
The Challenger layoff intentions report for August at 7:30 ET on
Wednesday will probably continue to show that layoff activity is quite
slow outside of the government/nonprofit category. After the round of
deep job cutting in early 2009, most businesses are down to minimal
payrolls and reluctant to lose their core of skilled employees.
The Monster.com Employment Index for August in the early hours of
Thursday and will show where the on-line job announcements are growing,
mostly for skilled workers in specific fields like healthcare.
The perceptions of labor market strength in the Conference Board’s
report on Consumer Confidence at 10:00 ET on Tuesday. Consumers have
maintained a perception of low job availability and difficulty in
finding work that has been consistent with the level of nonfarm
payrolls.
The August employment indexes in the Chicago Purchasing Managers
Business Barometer at 9:45 ET on Tuesday, and the ISM Manufacturing
Index at 10:00 ET on Wednesday. The ISM index for non-manufacturing
businesses at 10:00 ET on Friday will not be out until after the
employment data. The impression left by the employment components of
these reports should be for continued slow job growth in manufacturing.
The headline index numbers are likely to provide further confirmation of
a slowdown in the factory sector.
A few reports related to the housing market are on the calendar.
None is likely to change concerns about the dismal state of housing.
The S&P/Case-Shiller Home Price Index for June at 9:00 ET on
Tuesday will hopefully add another month to the two consecutive
increases in April and May. In spite of a sharp slowing in sales, home
values have managed to eke out some increases. This may not hold into
July when the drop in sales was steep for both existing and new homes.
This may put some pressure on home sellers to lower prices.
Data on construction spending in July at 10:00 ET on Wednesday is
already understood to be quite weak on the residential side, and the
only new information is likely to be the spending on home improvements
and renovations. Public spending for projects is probably flattening out
as fiscal stimulus monies continue to be used up.
The NAR’s Pending Home Sales Index for July at 10:00 ET on Thursday
is not likely to lift the gloom around prospects for a pickup in home
sales. Without an incentive like the homebuyer tax credit program,
potential homebuyers are going to wait until they are surer of the
economic outlook and the labor market.
Data on personal income and spending in July at 8:30 ET on Monday
will probably reflect slightly higher wages and salaries, but restrained
spending. The PCE deflator should be consistent with continued subdued
inflation.
The Consumer Confidence Index at 10:00 ET on Tuesday should be in
line with the changes in the Reuters/University of Michigan measure, and
the ABC weekly Consumer Comfort Index. Consumers remain concerned about
the economic outlook and their future prospects.
Industry data on sales of domestically produced motor vehicles in
August will be published on Wednesday, and that for same-store sales
comparisons for fiscal August on Thursday. Neither is anticipated to
show much strength. Weekly measures of retail activity were generally
soft in August, and the usual back-to-school shopping boost never seemed
to emerge.
The revision to the second quarter nonfarm productivity and unit
labor costs at 8:30 ET on Thursday should follow the direction of the
GDP revision, which is widely expected to be revised sharply lower from
the 2.4% rate in the preliminary estimate.
The data for factory orders in June at 10:00 ET on Thursday might
provide some upward revision to the 0.3% increase already reported for
durable goods. However, this is against a background of widespread
softness outside of the transportation sector, and would not ease
worries about slowing in manufacturing.
The Dallas Fed’s Texas Manufacturing Survey for August is at 10:30
ET on Monday. The District has been laboring under unusual economic
conditions with the oil spill in the Gulf of Mexico inhibiting activity
in several industries, particularly tourism and fishing. With the
capping of the oil well, things may start to improve.
There are no major central bank announcements on the calendar until
early September.
The release of the FOMC meeting minutes from August 10 will be at
14:00 ET on Tuesday. Hints in the press that the FOMC had a particularly
difficult time reaching consensus, and the thinking involved in the
decision to begin to reinvest maturing securities as well as buy more
longer-term Treasuries will be carefully scrutinized.
Fed speakers are few in the week. The only one scheduled at this
time is for Atlanta Fed President Lockhart to speak on the economy at
Tennessee State University on Friday. Audience and media Q&A is
expected.
Governor Donald Kohn is scheduled to retire as of September 1.
A 20-year TIPS bond will be announced on Monday, to auction on
Thursday, and settle on September 15.
** Stone & McCarthy Research Associates **
[TOPICS: M$$FI$,M$U$$$,MAUDS$]
