The Business News Week Ahead

It will be a week split in two by Wednesday's Fourth of July holiday. The first half will be concentrated on the factory sector with ISM manufacturing out on Monday and offering an advance look at June and with factory orders on Tuesday offering a definitive and final look at May. Construction spending will be posted on Monday and strength in this report would support second-quarter GDP expectations. The sleeper in the first half of the week will be Tuesday's unit vehicle sales where the total will offer the very first hints whether consumer spending rebounded or not in June. Coming back from the holiday, services will be Thursday's theme highlighted by ISM non-manufacturing whose sample has been voicing concern over tariff risk. FOMC minutes will be released Thursday afternoon for a meeting that produced a rate hike and raised expectations for more. June's employment report on Friday will top the week and another month of very solid strength, including an uptick in year-on-year wage growth, is the expectation. Also released Friday morning will be international trade data which, based on a substantial rise in exports in advance data on the goods side of the report, is expected to show a sharp decline in the deficit.

Monday

PMI Manufacturing for June, Final

Consensus Forecast: 54.6

Consensus Range: 54.6 to 56.2

The PMI manufacturing index is expected to come in at a final of 54.6 in June, unchanged from the mid-month flash. Amid warnings of tariff effects, the flash report cited a "clear loss of momentum" with new orders slipping and with export sales at a 2-year low.

ISM Manufacturing Index for June

Consensus Forecast: 58.3

Consensus Range: 57.0 to 60.0

Econoday's consensus is calling for slight slowing at a still elevated level for the ISM manufacturing index, to 58.3 in June vs 58.7 in a May. But the top-end forecast is calling for acceleration to 60.0 in a reminder that both new orders and, in a rarity, backlog orders were both well over 60 in the last report.

Construction Spending for May

Consensus Forecast, Month-to-Month Change: 0.6% 

Consensus Range: 0.4% to 1.2%

A rebound in multi-family units helped drive construction spending 1.8 percent higher in April to fully reverse the prior month's 1.7 percent decline. Construction spending, often volatile month to month, is expected to rise a very constructive 0.6 percent in May in what would be a positive for second-quarter GDP.

Tuesday

Unit Vehicle Sales for June

Consensus Forecast, Annualized Rate: 17.0 million

Consensus Range: 16.9 to 17.1 million

A 17.0 million annualized rate is the consensus for unit vehicle sales in June, a moderate-to-solid outcome that would compare with 16.9 million in May and hint at another constructive month for the auto component of the retail sales report.

Factory Orders for May

Consensus Forecast, Month-to-Month Change: -0.1%

Consensus Range: -2.2% to 0.2%

Durable goods orders for May slipped back both at the headline level and when excluding transportation equipment, yet the report nevertheless showed fundamental strength highlighted by another strong build in unfilled orders. Forecasters see factory orders in May, a report that will include data on non-durable goods, slipping 0.1 percent.

Thursday

ADP, Private Payrolls for June

Consensus Forecast: 188,000

Consensus Range: 162,000 to 205,000

Econoday's consensus for ADP's private payroll estimate in June is 188,000 which would compare with 178,000 in ADP's May estimate and against 218,000 in the government's data for May. ADP is always hit and miss and underestimated the strength of the May employment report.

Initial Jobless Claims for June 30 week

Consensus Forecast: 223,000

Consensus Range: 220,000 to 225,000

Initial claims are expected to come in at 223,000 in the June 30 week vs 227,000 in the prior week. All readings in this report are at or near historic lows and consistent with strong demand for labor.

PMI Services for June, Final

Consensus Forecast: 56.5

Consensus Range: 56.5 to 56.5

PMI services moved higher in the flash report for June on strength in both new orders and employment as well, however, as a 5-year high for input costs. The index is expected to hold at the 56.5 flash reading.

ISM Non-Manufacturing Index for June

Consensus Forecast: 58.3

Consensus Range: 56.0 to 59.0

A steady pace is the call for the ISM non-manufacturing index which has been signaling strong activity underscored by sharp slowing in delivery times. Higher costs tied to tariffs and a shifting outlook for trade have been central concerns of the sample. Forecasters see the index easing very slightly to 58.3 in June.

FOMC Minutes

Covering the June 12-13 Meeting

The June meeting produced an incremental 25-basis-point rate hike as expected but also included an increase in the number of rate hikes FOMC forecasters are expecting for the remainder of the year, from one to two. The quarterly FOMC forecasts also pointed to increasing strength for both employment and inflation. A rebound for the consumer was a highlight of the FOMC statement, though this may seem outdated following the subsequent slowing in consumer spending data for May.

Friday

Nonfarm Payrolls for June

Consensus Forecast: 190,000

Consensus Range: 144,000 to 210,000

Unemployment Rate

Consensus Forecast: 3.8%

Consensus Range: 3.7% to 3.8%

Private Payrolls 

Consensus Forecast: 183,000

Consensus Range: 142,000 to 205,000

Manufacturing Payrolls 

Consensus Forecast: 15,000

Consensus Range: 10,000 to 18,000

Participation Rate

Consensus Forecast: 62.7%

Consensus Range: 62.7% to 62.8%

Average Hourly Earnings

Consensus Forecast, Month-to-Month Change: 0.2%

Consensus Range: 0.2% to 0.3%

Average Hourly Earnings

Consensus Forecast, Year-on-Year Change: 2.8%

Consensus Range: 2.7% to 2.9%

Average Workweek

Consensus Forecast: 34.5 hours

Consensus Range: 34.5 to 34.5 hours

Following a very strong May, nonfarm payrolls are expected to extend their strength to June where Econoday's consensus is calling for a 190,000 rise. The unemployment rate, down 1 tenth to 3.8 percent, was the highlight of the May report with June's rate seen holding unchanged. Wages showed some pressure in May and mixed results are expected for June with the monthly gain for average hourly earnings modest at a 0.2 percent consensus, enough however to lift the year-on-year rate by an expected 1 tenth to 2.8 percent. Private payrolls are seen rising 183,000 with manufacturing payrolls, at 15,000, expected to show another solid increase at 15,000. The workweek is seen unchanged at 34.5 hours with the labor participation rate also unchanged at 62.9 percent.

International Trade Balance for May

Consensus Forecast: -$43.5 billion

Consensus Range: -$50.5 to -$42.7 billion

The international trade deficit for goods and services is expected to narrow sharply in May to $43.5 billion in line with major improvement in advance data on the goods side of the report. The advance data showed a very strong 2.1 percent rise for exports against only a 0.2 percent gain for imports. Tariff effects have so far been limited in this report.