For the week of August 29th (in conjunction with Econoday):
There will be no big earnings reports this week, however, the economic calendar is loaded just about every day of the week. We’ll get crucial international PMI data, US ISM data, Case Shiller housing, chain store sales, the all important monthly jobs report and a slew of others. Let’s take a look at what’s on tap:
Personal Income and Outlays 8:30 AM ET
Personal income in June was unchanged, following a 0.3 percent boost the month before. What the consumer really bases spending on fared even worse. The wages & salaries component slipped 0.1 percent after posting a healthy 0.4 percent advance in May. Overall personal consumption was flat, following a 0.1 percent rise in May. Tugged down by lower energy costs, the headline PCE price index dipped 0.1 percent, matching May’s decrease. The core rate was flat after a 0.1 percent gain in May. Looking ahead, we should see improvement in July at least in wages and salaries as aggregate weekly earnings jumped 0.6 percent. PCEs are likely to rise as retail sales excluding autos rose 0.2 percent in July and unit new motor vehicle sales rebounded 3.3 percent. Look for a bump up in headline PCE inflation as the overall CPI gained 0.3 percent in July. But the core CPI rose only 0.1 percent.
Personal income Consensus Forecast for July 10: + 0.3 percent
Personal consumption expenditures Consensus Forecast for July 10: + 0.3 percent
Core PCE price index Consensus Forecast for July 10: + 0.1 percent
ICSC-Goldman Store Sales 7:45 AM ET
Redbook 8:55 AM ET
S&P Case-Shiller HPI 9:00 AM ET
Chicago PMI 9:45 AM ET
The Chicago PMI in June rose to 62.3, a level right at the top of the recovery and indicating very strong, if not robust, month-to-month growth. And we are likely to see another healthy number in August as July’s new orders index jumped 5-1/2 points to 64.6.
Chicago PMI Consensus Forecast for August 10: 56.0
Consumer Confidence 10:00 AM ET
The Conference Board’s consumer confidence index slipped to 50.4 in July from an upwardly revised 54.3 in June (initially 52.9). The latest decrease was led by a drop in expectations to 66.6 from 72.7 in June. But the present situation sub-index also declined-to 26.1 from 26.8. Looking ahead, we already have an early indication from the final August consumer sentiment index from Reuters/University of Michigan. The August sentiment reading was up only marginally at 68.9 from its July full-month reading of 67.8. The level remains quite low.
Consumer confidence Consensus Forecast for August 10: 51.0
State Street Investor Confidence Index 10:00 AM ET
FOMC Minutes 2:00 PM ET
The Minutes of the August 10 FOMC meeting are scheduled for release at 2:00 p.m. ET. Traders will be parsing for any new information on Fed plans for quantitative easing.
Motor Vehicle Sales
Sales of domestic light motor vehicles made a comeback in July, rising to an 8.7 million annual rate compared to June’s 8.4 million. Combined light truck and auto sales of domestics and imports rose to 11.5 million units annualized from 11.2 million the month before. The biggest source of strength in July was a 4.8 percent jump in domestic light trucks which includes SUVs, vans, and minivans. According to industry sources, most of the July boost in sales came from fleet purchases by such as rental car agencies. So, sales in August may come off this boost in July.
Motor vehicle domestic sales Consensus Forecast for August 10: 8.7 million-unit rate
MBA Purchase Applications 7:00 AM ET
Challenger Job-Cut Report 7:30 AM ET
ADP Employment Report 8:15 AM ET
ISM Mfg Index 10:00 AM ET
The composite index from the ISM manufacturing survey eased to 55.5 from 56.2 in June – but still reflected moderate growth in activity as the reading topped the breakeven point of 50. Production slowed nearly 4-1/2 points in July to what for now is a still very strong 57.0. Looking ahead, we may see more moderation in the composite in August as the July new orders index fell to 53.5 from 58.5 in June.
ISM manufacturing composite index Consensus Forecast for August 10: 53.0
Construction Spending 10:00 AM ET
Construction spending in June edged up 0.1 percent, following a 1.0 percent drop in May. The June rebound was led by a 1.5 percent jump in public outlays, following a 0.3 percent decline the prior month. In contrast, the private residential component declined 0.8 percent and private nonresidential outlays slipped 0.5 percent in June. Looking ahead, there likely will be weakness in at least the residential component of outlays as housing starts have been on a downtrend April. The May and June starts declines of 13.4 percent and 8.7 percent, respectively, should weigh on outlays despite a 1.7 percent uptick in starts in July.
Construction spending Consensus Forecast for July 10: -0.6 percent
EIA Petroleum Status Report 10:30 AM ET
Chain Store Sales
Monster Employment Index 6:00 AM ET
ECB Announcement 7:45 AM ET
Jobless Claims 8:30 AM ET
Initial jobless claims for the August 21 week fell 31,000 for the second biggest decline of the year to 473,000. The prior week was revised 4,000 higher to 504,000— the highest level since November. Continuing claims fell 62,000 in data for the August 14 week to a 4.456 million level, the best of the recovery. But much of the decline likely reflects the expiration of benefits.
Jobless Claims Consensus Forecast for 8/28/10: 470,000
Productivity and Costs 8:30 AM ET
Nonfarm business productivity for the first quarter was revised to an annualized increase of 2.8 percent, compared to the initial estimate of 3.6 percent. Growth in unit labor costs was nudged up to a 1.3 percent annualized decrease from the initial estimate of a 1.6 percent decline for the first quarter. Looking ahead, second quarter GDP is significantly slower than for the first quarter, coming in at a revised 1.6 percent annualized, compared to the first quarter’s 3.7 percent. This indicates that productivity in the second quarter will likely be less robust in the second quarter while unit labor costs will be higher.
Nonfarm Business Productivity Consensus Forecast for initial Q2 10: -1.9 percent annual rate
Unit Labor Costs Consensus Forecast for initial Q2 10: +1.2 percent annual rate
Factory Orders 10:00 AM ET
Factory orders fell 1.2 percent in June after a 1.8 percent drop in May. For the latest month, the durable goods component fell 1.2 percent while orders for nondurable goods decreased 1.3 percent. More recently in the advance report, new factory orders for durable goods in July rebounded 0.3 percent, following a revised 0.1 percent decline the prior month.
Factory orders Consensus Forecast for July 10: +0.3 percent
Pending Home Sales Index 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
Employment Situation 8:30 AM ET
Nonfarm payroll employment in July declined 131,000 after falling a revised 221,000 in June and after a 432,000 boost in May. Of the July government plunge, 143,000 came from a drop in Census Bureau payrolls. State government fell 10,000 while local government dropped 38,000. Private nonfarm employment, which discounts the effects of hiring and firing temporary Census workers, accelerated moderately to a 71,000 increase, following a 31,000 gain in June. Average hourly earnings improved to up 0.2 percent, following no change in June. The average workweek for all workers rose to 34.2 hours from 34.1 hours in June. Turning to the household survey, the unemployment rate was unchanged at 9.5 percent in July. More recently, despite a dip this past week, initial jobless claims in August have been running higher than during July and this implies sluggish payroll and unemployment numbers. Employment indexes for the Philly and New York Fed manufacturing surveys were mixed as Empire rose while Philly slipped from positive to negative. Analysts will be tweaking their expectations with the ISM manufacturing and ADP reports just ahead of Friday’s employment situation.
Nonfarm payrolls Consensus Forecast for August 10: -80,000
Private nonfarm payrolls Consensus Forecast for August 10: +50,000
Unemployment rate Consensus Forecast for August 10: 9.6 percent
Average workweek Consensus Forecast for August 10: 34.2 hours
Average hourly earnings Consensus Forecast for August 10: + 0.1 percent
ISM Non-Mfg Index 10:00 AM ET
The composite index from the ISM non-manufacturing survey in July improved to 54.3 from 53.8 month before. Yet business activity, akin to a production index, edged lower to a still very strong 57.4 – well above breakeven of 50. But we could see a higher composite in August as the new orders index rose nearly 2-1/2 points to 56.7.
ISM non-manufacturing composite index Consensus Forecast for August 10: 53.0
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.