U.S.A. Economics today
Introduction
The September employment report has made the chances of a month-end FOMC
rate hike seem as distant as foreign shores. But it's the weakness of foreign
demand, which the FOMC warned us about at their last meeting, that appears to be
tipping the economy to the soft side. This week was packed with data, some of it not
so good like employment and factory orders, and some of it, closer to home, actually very good.
Simply bad news
Where's everyone going?
Unemployment Shrinking
Factory frontline fatigue
ISM Manufacturing
Vehicle Sales
Credit Cards Up
When is bad news, Bad news
Markets at a Glance
The Bottom Line
There's still two employment reports to go before the December FOMC but they will have to be very much stronger than what we got in September, otherwise scratch liftoff from what remains of your 2015 calendar. Some of the FOMC hawks were vocal in their dissent against the September decision to push back the liftoff, saying core inflation is bound to rise and it's the Fed's business to look tough and act tough. It will be interesting to see how vocal the hawks will be now and how, or if, they may change their tune .
Looking Ahead: Week of October 5 to October 9
Strength in the service sector is central right now for the economy given export weakness in the factory sector. Both the services PMI and the ISM non-manufacturing reports will offer updates on Monday while the labor market conditions index could refocus attention on the prior week's employment report. Weakness in exports, based on advance data, is certain for Tuesday's trade report where imports, in contrast, will show a sharp rise that points to the strength of domestic demand. And recent gains for the revolving credit component of the consumer credit report, to be released Wednesday, have been offering new evidence of domestic demand. Another jobless claims report, where readings have been very low, will be posted on Thursday while import & export prices, which have been in long contraction, will be posted Friday.
Monday
The services PMI has been running in the mid-50s to indicate very solid growth in composite activity and the Econoday consensus is calling for a September reading of 55.8. But new orders have been slowing and service providers have been working down backlogs to keep busy. It hasn't stopped the sample from hiring, however, which the report has been describing all year as "robust". Price readings have been in contraction.
Services PMI - Consensus Forecast for September, Final: 55.8
Range: 54.8 to 58.0
Growth in the ISM non-manufacturing sample is expected to edge back 1 point to a composite 58.0, which nevertheless would be a very strong rate of growth. And in sharp contrast to the services PMI report, new orders have been rising sharply and backlog orders have been growing not contracting. Note that the ISM report includes the construction and mining sectors as well as the services sector.
ISM Non-Manufacturing Index - Consensus Forecast for September: 58.0
Range: 57.0 to 58.8
The labor market conditions index is expected to hold steady at 2.0, in what would extend growth to five straight months. Still, growth has been a bit slower than the mid-single digit trend over 2013 and 2014.
Labor Market Conditions Index - Consensus Forecast for September: 2.0
Range: 0.0 to 3.0
Tuesday
The international trade gap is expected to widen substantially based on the prior week's advance data in the international trade in goods report where, due to a decline in exports and a rise in imports, the gap rose sharply. Weakness in exports has been a negative theme all year for the economy but the rise in imports, though counted as a subtraction in the national accounts, does underscore the strength of domestic demand. The consensus sees a gap at a very steep $48.6 billion for August.
International Trade, M/M Chg - Consensus Forecast for August: -$48.6 billion
Range: -$50.2 to -$41.0 billion
Wednesday
Consumer credit is expected to rise $20.5 billion in August but the key will be the revolving credit component which has posted a rare run of five straight gains to indicate rising use of credit card debt, which in turn signals greater confidence among consumers.
Consumer Credit, M/M Chg - Consensus Forecast for August: +$20.5 billion
Range: +$18.0 to +$23.0 billion
Thursday
Jobless claims are expected to fall back slightly to 271,000 in the October 3 week. For the past six months, claims have been signaling tight conditions in the labor market and have been offering the hawks their strongest arguments at the FOMC.
Initial Jobless Claims - Consensus Forecast for October 3 Week: 271,000
Range: 260,000 to 275,000
Friday
Import & export prices have been signaling deepening rates of cross-border price contraction. The declines have swept nearly all readings in this report through much of the year. Easing declines, but declines nevertheless, are forecast for September
Import Prices, M/M Chg - Consensus Forecast for September: -0.4%
Range: -0.9% to +0.4%
Export Prices, M/M Chg - Consensus Forecast for September: -0.2%
Range: -0.5% to 0.0%
Wholesale inventories are expected to rise 0.1 percent in August, a build that would not be of concern as long as wholesale sales post a gain. Slow economic growth is making the nation's inventories look heavy.
Wholesale Inventories, M/M Chg - Consensus Forecast for August: +0.1%
Range: -0.2% to +0.2%
Introduction
The September employment report has made the chances of a month-end FOMC
rate hike seem as distant as foreign shores. But it's the weakness of foreign
demand, which the FOMC warned us about at their last meeting, that appears to be
tipping the economy to the soft side. This week was packed with data, some of it not
so good like employment and factory orders, and some of it, closer to home, actually very good.
Simply bad news
Where's everyone going?
Unemployment Shrinking
Factory frontline fatigue
ISM Manufacturing
Vehicle Sales
Credit Cards Up
When is bad news, Bad news
Markets at a Glance
The Bottom Line
There's still two employment reports to go before the December FOMC but they will have to be very much stronger than what we got in September, otherwise scratch liftoff from what remains of your 2015 calendar. Some of the FOMC hawks were vocal in their dissent against the September decision to push back the liftoff, saying core inflation is bound to rise and it's the Fed's business to look tough and act tough. It will be interesting to see how vocal the hawks will be now and how, or if, they may change their tune .
Looking Ahead: Week of October 5 to October 9
Strength in the service sector is central right now for the economy given export weakness in the factory sector. Both the services PMI and the ISM non-manufacturing reports will offer updates on Monday while the labor market conditions index could refocus attention on the prior week's employment report. Weakness in exports, based on advance data, is certain for Tuesday's trade report where imports, in contrast, will show a sharp rise that points to the strength of domestic demand. And recent gains for the revolving credit component of the consumer credit report, to be released Wednesday, have been offering new evidence of domestic demand. Another jobless claims report, where readings have been very low, will be posted on Thursday while import & export prices, which have been in long contraction, will be posted Friday.
Monday
The services PMI has been running in the mid-50s to indicate very solid growth in composite activity and the Econoday consensus is calling for a September reading of 55.8. But new orders have been slowing and service providers have been working down backlogs to keep busy. It hasn't stopped the sample from hiring, however, which the report has been describing all year as "robust". Price readings have been in contraction.
Services PMI - Consensus Forecast for September, Final: 55.8
Range: 54.8 to 58.0
Growth in the ISM non-manufacturing sample is expected to edge back 1 point to a composite 58.0, which nevertheless would be a very strong rate of growth. And in sharp contrast to the services PMI report, new orders have been rising sharply and backlog orders have been growing not contracting. Note that the ISM report includes the construction and mining sectors as well as the services sector.
ISM Non-Manufacturing Index - Consensus Forecast for September: 58.0
Range: 57.0 to 58.8
The labor market conditions index is expected to hold steady at 2.0, in what would extend growth to five straight months. Still, growth has been a bit slower than the mid-single digit trend over 2013 and 2014.
Labor Market Conditions Index - Consensus Forecast for September: 2.0
Range: 0.0 to 3.0
Tuesday
The international trade gap is expected to widen substantially based on the prior week's advance data in the international trade in goods report where, due to a decline in exports and a rise in imports, the gap rose sharply. Weakness in exports has been a negative theme all year for the economy but the rise in imports, though counted as a subtraction in the national accounts, does underscore the strength of domestic demand. The consensus sees a gap at a very steep $48.6 billion for August.
International Trade, M/M Chg - Consensus Forecast for August: -$48.6 billion
Range: -$50.2 to -$41.0 billion
Wednesday
Consumer credit is expected to rise $20.5 billion in August but the key will be the revolving credit component which has posted a rare run of five straight gains to indicate rising use of credit card debt, which in turn signals greater confidence among consumers.
Consumer Credit, M/M Chg - Consensus Forecast for August: +$20.5 billion
Range: +$18.0 to +$23.0 billion
Thursday
Jobless claims are expected to fall back slightly to 271,000 in the October 3 week. For the past six months, claims have been signaling tight conditions in the labor market and have been offering the hawks their strongest arguments at the FOMC.
Initial Jobless Claims - Consensus Forecast for October 3 Week: 271,000
Range: 260,000 to 275,000
Friday
Import & export prices have been signaling deepening rates of cross-border price contraction. The declines have swept nearly all readings in this report through much of the year. Easing declines, but declines nevertheless, are forecast for September
Import Prices, M/M Chg - Consensus Forecast for September: -0.4%
Range: -0.9% to +0.4%
Export Prices, M/M Chg - Consensus Forecast for September: -0.2%
Range: -0.5% to 0.0%
Wholesale inventories are expected to rise 0.1 percent in August, a build that would not be of concern as long as wholesale sales post a gain. Slow economic growth is making the nation's inventories look heavy.
Wholesale Inventories, M/M Chg - Consensus Forecast for August: +0.1%
Range: -0.2% to +0.2%
