The Economic News Week Ahead

An extraordinarily heavy week of economic news will include an FOMC statement at mid-week and an employment report at week's end. The housing sector has been flat and only a modest gain is the expectation for Monday's pending home sales report. With Tuesday's personal income and outlays data already contained in second-quarter GDP, the day's focus will be the quarterly release of the employment cost index and a key reading on wage pressures. Vehicle sales on Wednesday will offer the first solid hints on consumer spending for July with data later in the day to include ISM manufacturing, which has been red hot, and construction spending which has been mixed. But Wednesday's big news will be the mid-afternoon FOMC statement where there are no meaningful expectations for a rate hike. Jobless claims and factory orders will mark time ahead of employment data on Friday with expectations pointing to yet another month of significant strength. The good news when there are so many reports in one week is that the following week is guaranteed to be a lighter!

Monday

Pending Home Sales Index for June

Consensus Forecast, Month-to-Month Change: 0.8%

Consensus Range: 0.3% to 1.0%

Pending home sales are expected to increase 0.8 percent in June after falling 0.5 percent rise in May. This index has on trend been accurately forecasting flat to declining results for the existing home sales report.

Dallas Fed General Activity Index for July

Consensus Forecast: 32.0

Consensus Range: 29.0 to 38.5

Dallas has been among the very strongest of the regional surveys, the result of high energy prices which are making for big gains in orders and also confidence in the outlook. Another month of strength is expected for July, at a consensus 32.0 for the general activity index vs June's outsized 36.5.

Tuesday

Personal Income for June

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

Consensus Range: 0.3% to 0.4%

Consumer Spending

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

Consensus Range: 0.4% to 0.5%

PCE Price Index

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

Consensus Range: 0.1% to 0.2%

PCE Price Index

Consensus Forecast, Year-on-Year Change: 2.3%

Consensus Range: 2.3% to 2.4%

Core PCE Price Index

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

Consensus Range: 0.1% to 0.6%

Core PCE Price Index

Consensus Forecast, Year-on-Year Change: 2.0%

Consensus Range: 1.9% to 2.2%

Both personal income and consumer spending are seen rising a moderate-to-solid 0.4 percent in June. Note that the data will unbundle June's contribution from last week's second-quarter GDP report. The core PCE price index, which excludes both food and energy, is seen posting a 0.2 percent monthly rise for a year-on-year gain of 2.0 percent. This index, which is the most closely watched of all inflation readings, first hit the Fed's 2 percent goal in the May report.  The consensus for the overall price index is for a 0.1 percent monthly gain and a year-on-year rate of 2.3 percent.

Employment Cost Index for 2nd Quarter

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

Consensus Range: 0.6% to 1.0%

Slightly easing pressure is expected for the employment cost index with Econoday's consensus at a 0.7 percent rise in the second quarter compared to 0.8 percent in the first quarter. The year-on-year rate in the first quarter, at 2.7 percent, was the highest in 10 years in what was a strong signal of wage pressures in the labor market.

Case-Shiller, 20-City Adjusted Index for May

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

Consensus Range: 0.2% to 0.6%

Case-Shiller, 20-City Unadjusted Index

Consensus Forecast, Month-to-Month Change: 0.8%

Consensus Range: 0.7% to 0.9%

Case-Shiller, 20-City Unadjusted Index

Consensus Forecast, Year-on-Year Change: 6.6%

Consensus Range: 6.4% to 6.9%

Home-price appreciation appears to have tangibly slowed during the Spring selling season. FHFA house prices have been flat while Case-Shiller data slowed in April. But noticeable strength is the call for Case-Shiller data in May where the consensus gain for the 20-city adjusted index is 0.4 percent vs only 0.2 percent in April with the unadjusted year-on-year rate seen holding at April's 6.6 percent. The consensus for unadjusted monthly growth, reflecting the relative price strength of May compared with other months of the year, is 0.8 percent.

Chicago PMI for July

Consensus Forecast: 62.0

Consensus Range: 57.3 to 64.8 

Easing strength at a very high level is the call for the Chicago PMI with the July consensus at 62.0 vs an overheated 64.1 in a June report when delivery delays hit a 14-year high and input costs a 7-year high.

Consumer Confidence Index for July

Consensus Forecast: 126.9

Consensus Range: 126.0 to 127.5

Econoday's consensus, at 126.9 in July, is calling for steady strength in the consumer confidence index which came in at 126.4 in June. Job assessments, especially the closely watched jobs-hard-to-get subcomponent, have been extraordinarily strong.

Wednesday

Total Unit Vehicle Sales for July

Consensus Forecast, Annualized Rate: 17.1 million

Consensus Range: 16.6 to 17.3 million

Domestic-made Unit Vehicle Sales

Consensus Forecast, Annualized Rate: 12.9 million

Consensus Range: 12.9 to 13.2 million

A 17.1 million annualized rate is the consensus for total unit vehicle sales in July, a solid outcome that, however, would compare with a 17.5 million pace in June which easily topped Econoday's consensus range. Though July's rate is expected to be strong, the month-to-month comparison with June's strength could point to weakness for the motor vehicle component of the retail sales report. Domestic-made vehicles are expected to sale at a 12.9 million vs May's 13.6 million.

ADP, Private Payrolls for July

Consensus Forecast: 172,000

Consensus Range: 150,000 to 198,000

Econoday's consensus for ADP's private payroll estimate in July is 172,000 which would compare with 177,000 in ADP's June estimate and against 202,000 in the government's data for June. ADP is always hit or miss and has underestimated the strength of the last two employment reports.

PMI Manufacturing for July, Final

Consensus Forecast: 55.5

Consensus Range: 55.5 to 55.8

The PMI manufacturing index is expected to come in at a final 55.5 in July, unchanged from the mid-month flash. Orders in the flash report were very strong, reversing what was a warning signal of tariff-related slowing in the June report.

ISM Manufacturing Index for July

Consensus Forecast: 59.4

Consensus Range: 58.0 to 60.4

Near record delivery delays and a plus 75 reading for input costs headlined ISM's overheated manufacturing report in June. Forecasters see the composite index easing only slightly from June's 60.2, at a consensus 59.4.

Construction Spending for June

Consensus Forecast, Month-to-Month Change: 0.3% 

Consensus Range: -0.3% to 1.1%

A modest rate of monthly growth is the Econoday consensus for June construction spending, at a 0.3 percent gain vs May's 0.4 percent rise. May's report was led by multi-unit housing, offsetting another choppy performance for the non-residential side of the report.

Federal Funds Target for July 31 & August 1 Meeting

Consensus Forecast, Midpoint: 1.875%

Consensus Range: 1.75% to 2.00%

There are no expectations that the FOMC will respond to the very strong second-quarter GDP report or will launch a retaliatory rate hike to assert its independence following the administration's calls for policy adjustment to go slow. All of Econoday's panel see the federal funds target holding at a 1.875 percent midpoint within a 1.75 to 2.00 percent range. There is no press conference or economic forecasts to go along with this meeting's statement where updates on consumer spending, the labor market and inflation, should they prove hawkish, could raise the number of future rate hikes that are expected.

Thursday

Initial Jobless Claims for July 28 week

Consensus Forecast: 218,000

Consensus Range: 216,000 to 225,000

Initial claims are expected to come in at 218,000 in the July 28 week vs 217,000 in the prior week. All readings in this report are at or near historic lows and consistent with strong demand for labor.

Factory Orders for June

Consensus Forecast, Month-to-Month Change: 0.8%

Consensus Range: 0.2% to 2.5%

Durable goods orders for June were helped, but much less than expected, by aircraft orders. Orders excluding transportation equipment proved moderate while orders for core capital goods proved solid. Forecasters see factory orders in May, a report that will include fresh data on non-durable goods, rising 0.8 percent.

Friday

Nonfarm Payrolls for July

Consensus Forecast: 188,000

Consensus Range: 150,000 to 205,000

Unemployment Rate

Consensus Forecast: 3.9%

Consensus Range: 3.8% to 4.0%

Private Payrolls 

Consensus Forecast: 184,000

Consensus Range: 148,000 to 204,000

Manufacturing Payrolls 

Consensus Forecast: 15,000

Consensus Range: 11,000 to 22,000

Participation Rate

Consensus Forecast: 62.8%

Consensus Range: 62.7% to 62.8%

Average Hourly Earnings

Consensus Forecast, Month-to-Month Change: 0.3%

Consensus Range: 0.2% to 0.4%

Average Hourly Earnings

Consensus Forecast, Year-on-Year Change: 2.7%

Consensus Range: 2.6% to 2.8%

Average Workweek

Consensus Forecast: 34.5 hours

Consensus Range: 34.4 to 34.5 hours

Following a very strong May and June, nonfarm payrolls are expected to extend their strength to July where Econoday's consensus is calling for a 188,000 rise. The unemployment rate, at a July consensus of 3.9 percent, rose 2 tenths in June to 4.0 percent in what was a good sign as more people began to look for work. Despite all the strength, wages were flat in June and mixed results are expected for July with the monthly gain for average hourly earnings at a moderate at 0.3 percent consensus, not enough however to lift the year-on-year rate which is expected to hold at 2.7 percent. Private payrolls are seen rising 184,000 with manufacturing payrolls expected to show another solid increase at 15,000. The workweek is seen unchanged at 34.5 hours with the labor participation rate down 1 tenth to 62.8 percent.

International Trade Balance for June

Consensus Forecast: -$45.6 billion

Consensus Range: -$48.0 to -$41.0 billion

The international trade deficit for goods and services is expected to widen in June to $45.6 billion vs May's deficit of $43.1 billion. The goods side of this report has already been released and showed sizable widening as exports fell and import growth held steady.

PMI Services for July, Final

Consensus Forecast: 56.2

Consensus Range: 56.2 to 56.3

PMI services held steady and strong in the flash report for July on what was described as "robust" strength in new orders. The index is expected to hold at the 56.2 flash reading.

ISM Non-Manufacturing Index for July

Consensus Forecast: 58.8

Consensus Range: 57.9 to 59.0

A standout showing of 63.2 in June's new order index points squarely at another month of exceptional strength for the ISM non-manufacturing index in July where the consensus is 58.8. A plus in the June report was a slight cooling in delivery times, input costs, and order backlogs.