Strong job growth and a deeper decline in the
unemployment rate are the calls for the week's highlight: Friday's
employment report where nonfarm payrolls are expected to rise 205,000
and the unemployment rate is seen dipping to 4.0 percent. Despite the
strength, no new pressures are expected for the report's wage data.
Monday starts the week with service sector updates from the PMI and ISM
reports, both of which have been showing increasing strength, followed
on Tuesday by factory orders where a sizable January decline is the
expectation. Trade data will be the highlight on Wednesday morning and
an increasing deficit would only underscore the discussion about
tariffs. Wednesday afternoon will see the Beige Book where the economic
assessments have until now, at least, been very subdued.
Monday
PMI Services for February, Final
Consensus Forecast: 55.9
Consensus Range: 53.5 to 55.9
PMI services moved higher in the
flash for February and are expected to hold at the 55.9 result for the
final reading. New orders and business confidence showed special
strength in the flash report.
ISM Non-Manufacturing Index for February
Consensus Forecast: 58.8
Consensus Range: 58.0 to 60.0
The ISM non-manufacturing index is
expected to slow a bit in February, to a still hot 58.8 vs January's
unusually robust 59.9. With the new orders and employment indexes both
over 60, the January report was one of the very strongest on record for
this sample.
Tuesday
Factory Orders for January
Consensus Forecast, Month-to-Month Change: -1.2%
Consensus Range: -4.3% to -0.4%
Weakness is the call for January factory orders, at
a consensus decline of 1.2 percent and one based on sharp declines in
advance data on the durables side of this report. And weakness was the
wide result for January durables, especially for core capital goods
which showed weakness in both orders and also shipments.
Wednesday
ADP, Private Payrolls for February
Consensus Forecast: 203,000
Consensus Range: 172,000 to 223,000
ADP got back in the win column with a January call
that predicted what proved to be solid strength in the government's
employment report. ADP has been running above the
government's data which is reflected in the difference in Econoday's
consensus calls for each, at 203,000 for ADP in February and 195,000
for private payrolls.
International Trade Balance for January
Consensus Forecast: -$55.1 billion
Consensus Range: -$56.1 to -$52.8 billion
The international trade deficit is
expected to widen in January to $55.1 billion from February's already
steep deficit of $53.1 billion. Advance data on the goods portion of
this report showed sharp deepening with a 2.2 percent February drop in
exports.
Nonfarm Productivity, 2nd Estimate, 4th Quarter
Consensus Forecast, Annualized Rate: -0.1%
Consensus Range: -0.3% to 0.7%
Unit Labor Costs
Consensus Forecast, Annualized Rate: 2.2%
Consensus Range: 2.0% to 2.5%
Fourth-quarter output did rise at a 3.2 percent
annualized compared to the third quarter, but it took 3.3 percent more
hours to accomplish the increase. Given the lack of revisions in the
second estimate for GDP, very little change is expected for the second
estimate of nonfarm productivity, at minus 0.1 percent and unchanged from the first estimate, with unit labor costs at plus 2.2 percent vs an initial 2.0 percent.
Beige Book
Prepared for the March 20 & 21 FOMC Meeting
"Modest-to-moderate" has been the battle cry of the Beige Book
for the last year, including January's edition that, in contrast to
the month's FOMC statement which raised the inflation outlook,
described price growth as "modest-to-moderate" and downgraded the
strength of the factory sector and the labor market. More recently,
Jerome Powell is emphasizing the strength of the economy, something
that the Fed's Beige Book has yet to do.
Consumer Credit for January
Consensus Forecast: $17.8 billion
Consensus Range: $10.0 to $19.0 billion
Another tangible rise in consumer credit
is the call for January, at a consensus $17.8 billion vs $18.4 billion
in December and $31.0 billion in November. Consumers have been drawing
on their credit cards at a steady rate with revolving credit running at
6 percent annualized growth.
Thursday
Initial Jobless Claims for March 3 week
Consensus Forecast: 220,000
Consensus Range: 215,000 to 225,000
Initial claims are expected to
come in at 220,000 in the March 3 week vs 210,000 and a 49-year low in
the prior week. Claims have been low and consistent with minimal layoffs
and strong demand for labor.
Friday
Nonfarm Payrolls for February
Consensus Forecast: 205,000
Consensus Range: 152,000 to 230,000
Unemployment Rate
Consensus Forecast: 4.0%
Consensus Range: 4.0% to 4.1%
Private Payrolls
Consensus Forecast: 195,000
Consensus Range: 150,000 to 216,000
Manufacturing Payrolls
Consensus Forecast: 17,000
Consensus Range: 8,000 to 28,000
Participation Rate
Consensus Forecast: 62.7%
Consensus Range: 62.6% to 62.8%
Average Hourly Earnings
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: 0.1% to 0.3%
Average Hourly Earnings
Consensus Forecast, Year-on-Year Change: 2.9%
Consensus Range: 2.8% to 3.0%
Average Workweek
Consensus Forecast: 34.4 hours
Consensus Range: 34.3 to 34.4 hours
Econoday's consensus for February growth in nonfarm payrolls is 205,000 in what would be an extension of January's strength at 200,000. The unemployment rate
is expected to tick down to 4.0 percent which would increasingly point
to full employment and the risk of wage inflation. But wage pressures
aren't the call for the February report as average hourly earnings are seen rising a modest 0.2 percent in the month with the year-on-year rate unchanged at 2.9 percent. Private payrolls are expected to rise 195,000 with manufacturing payrolls expected to increase 17,000. The workweek is seen rising 1 tenth to 34.4 hours and the labor participation rate unchanged at 62.7 percent.
Wholesale Inventories for January
Consensus Forecast, Month-to-Month Change: 0.7%
Consensus Range: 0.5% to 0.7%
January wholesale trade inventories
are expected to rise 0.7 percent in line with advance data which also
rose 0.7 percent. Inventory build slowed in the fourth quarter but
looks to be gaining renewed steam in the first quarter.
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