The Business News Week Ahead

Aside from Jerome Powell at mid-week, the consumer and the factory sector are key themes in a week that gets started on Monday with retail sales where June strength is the call. But strength in May retail sales failed to pan out to overall strength in consumer spending which was held down by weak demand for services. Monday also sees the first of the week's factory updates with the July edition of Empire State which, in the last report for June, once again showed enormous strength along with, however, clear signs of capacity stress. Philly Fed will post its July data on Thursday following a June report that showed welcoming cooling. The week's most important factory update, industrial production on Tuesday, will offer the first definitive look at June's activity with solid bounce-back strength the expectation. Fed Chair Powell takes the hot seat on Tuesday before a Senate committee and on Wednesday before a House committee. Tariffs and trade wars and their possible effects, which were actively debated at the June FOMC and touched upon in Powell's radio interview in the week just passed, are hot topics certain to be discussed. Other data in the week include housing starts and permits on Wednesday, a report that has been showing uneven but often deceptive strength, and also the Fed's Beige Book that afternoon which will help set the atmosphere for the coming FOMC statement on August 1.

Monday

Retail Sales for June

Consensus Forecast: 0.6%

Consensus Range: 0.3% to 1.0%

Retail Sales Ex-Autos

Consensus Forecast: 0.4%

Consensus Range: 0.2% to 0.5%

Retail Sales Ex-Autos Ex-Gas

Consensus Forecast: 0.5%

Consensus Range: 0.3% to 0.6%

Retail Sales Control Group (Ex-Food Services, Ex-Autos, Ex-Gas, Ex-Building Materials)

Consensus Forecast: 0.4%

Consensus Range: 0.3% to 0.5%

A second month of strength is expected for retail sales with the consensus looking for a sizable 0.6 percent headline gain. Two key discretionary categories, vehicles and restaurants, have been on the climb. Auto sales, based on a jump in unit sales, are expected to be a positive in June making for less strength in the ex-auto consensus, at a 0.4 percent gain. Ex-auto ex-gas sales are seen rising 0.5 percent with control group sales, which also exclude food services and building materials, expected to rise 0.4 percent.

Empire State Index for July

Consensus Forecast: 21.0

Consensus Range: 17.0 to 26.0

Order data were very strong in the June Empire State report which points to general strength for the July edition. Econoday's consensus for July is 21.0 vs June's 25.0.

Business Inventories for May

Consensus Forecast,  Month-to-Month Change: 0.4%

Consensus Range: 0.3% to 0.4%

A healthy 0.4 percent increase is the consensus for business inventories in May, a constructive build that would nevertheless be too low given the strength of underlying sales.

Tuesday

Industrial Production for June

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

Consensus Range: 0.4% to 0.9%         

Manufacturing Production

Consensus Forecast,  Month-to-Month Change: 0.7%

Consensus Range: 0.6% to 1.0%

Capacity Utilization Rate

Consensus Forecast: 78.3%

Consensus Range: 78.0% to 78.4%

A big bounce back is expected for industrial production, at a consensus gain of 0.6 percent in June vs May's 0.1 percent downtick. The manufacturing component is expected to produce an even greater rebound, at a consensus 0.7 percent gain vs a 0.7 percent tumble in May that was tied to a one-time disruption in the auto supply chain. Pressures on capacity utilization are expected to tighten 4 tenths to 78.3 percent.

Housing Market Index for July

Consensus Forecast: 69

Consensus Range: 68 to 70 

Home-builder confidence is expected to move a bit higher in July, to a consensus 69 for the housing market index vs 68 in June. Readings in this report have been cooling this year though gains in new home sales have been strong.

Wednesday

Housing Starts for May

Consensus Forecast, Annualized Rate: 1.320 million

Consensus Range: 1.290 to 1.350 million

Building Permits

Consensus Forecast: 1.333 million

Consensus Range: 1.300 to 1.360 million

A step back for housing starts and a move higher for building permits are the expectations for June, at a 1.320 million annualized rate for starts, compared to 1.350 million in May, and 1.333 million for permits vs May's 1.301 million. Monthly results in this report have been uneven but trends very strong with starts up 20.3 percent year-on-year and permits up 8.0 percent.

Beige Book

Prepared for the FOMC meeting on July 31 & August 1

The long refrain of "modest-to-moderate" economic growth was finally broken in the last Beige Book which, citing special strength in manufacturing, threw out "modest" and upgraded the assessment to "moderate" alone. Yet consumer spending was downgraded in the last report but then upgraded at the time of the June FOMC and then ultimately downgraded again following weakness in the subsequent personal income & outlays report. Anecdotes on wage increases and the availability of labor, given the strength in the labor market, could be keys in the July edition.

Thursday

Initial Jobless Claims for July 14 week

Consensus Forecast: 220,000

Consensus Range: 216,000 to 225,000

Initial claims are expected to come in at 220,000 in the July 14 week vs 214,000 in the prior week. All readings in this report are at or near historic lows and consistent with strong demand for labor.

Philadelphia Fed Manufacturing Index for July

Consensus Forecast: 22.0

Consensus Range: 18.0 to 24.5 

Re-acceleration is the consensus for July's Philly Fed report which in June slowed sharply from record strength in May. The consensus for July is 22.0 vs 19.9 in June.

Index of Leading Economic Indicators for June

Consensus Forecast, Month-to-Month Change: 0.4%

Consensus Range: 0.3% to 0.4%

The index of leading economic indicators cooled in June to a 0.2 percent monthly gain. New strength and with it a more upbeat outlook on the second-half economy is the call for July, at an increase of 0.4 percent.