The Business News Week Ahead

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.