The Economics News Week Ahead

A heavy and important week made more compact by Monday's Labor Day holiday opens with manufacturing data on Tuesday starting with Markit's PMI, which softened at mid-month, followed by the ISM where a second month of moderation is the call. Shortages and tariff effects have been holding down construction with the latest update on spending also out on Tuesday. International trade data for July will be posted on Wednesday and, based on advance data for goods, a very slow start for third-quarter net exports seems certain. The week's sleeper is motor vehicle sales which will be posted late Wednesday amid expectations for yet another month of subdued results. The next day will offer last looks at August's labor market ahead of Friday's employment report including ADP, pushed to Thursday from Wednesday because of Monday's holiday, together with Challenger's layoff count and jobless claims data both of which have been unusually stable, low and favorable. Later Thursday morning will see service-sector updates from both Markit and ISM amid expectations for a flat reading in the former and reacceleration in the latter. The week caps off with what is expected to be a tangibly strong employment report for August which is expected to show a 198,000 rise in nonfarm payrolls, a downtick in the unemployment rate to 3.8 percent, and an uptick in average hourly earnings to a 2.8 percent yearly gain.

Tuesday

PMI Manufacturing for August Final

Consensus Forecast: 54.5

Consensus Range: 54.5 to 54.7

The PMI manufacturing index posted its slowest reading of the year in the August flash as orders, output and hiring all slowed. No change is expected for the flash with Econoday's consensus at 54.5 for the final August score. This index ended July at 55.5

ISM Manufacturing Index for August

Consensus Forecast: 57.6

Consensus Range: 56.5 to 58.1

Continuing moderation is what Econoday's forecasters see for the August ISM manufacturing index where the consensus is 57.6 vs a 58.1 result in July that barely made the low end of the consensus range. On the plus side, July's slowing likely gave this sample some breathing room as delivery delays, input costs, and the build in backlogs have been unusually severe this year.

Construction Spending for July

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

Consensus Range: 0.1% to 2.3%

In what has been an even more volatile year than usual for construction spending, the expectation for July is a moderate 0.4 percent bounce higher following a 1.1 percent drop in June that followed a 1.3 percent spike in May. Both residential and non-residential spending fell back in June with multi-unit housing showing significant weakness. Note that shortages of labor and high costs for materials are common complaints coming out of the construction sector.

Wednesday

International Trade Balance for July

Consensus Forecast: -$50.2 billion

Consensus Range: -$51.2 to -$44.8 billion

Tariff effects are still hard to isolate in the nation's data but the consensus for July's international trade balance is a sharp widening in the deficit, to $50.2 billion following $46.3 billion in June and a second-quarter average of $45.2 billion. July's forecast is based on advance data for goods which showed a very sharp drop in exports together with a rise in imports; the outcome in July will mark a key early entry in third-quarter GDP.

Total Unit Vehicle Sales for August

Consensus Forecast, Annualized Rate: 16.9 million

Consensus Range: 16.7 to 17.2 million

Domestic-made Unit Vehicle Sales

Consensus Forecast, Annualized Rate: 13.0 million

Consensus Range: 12.9 to 13.2 million

Not contributing much to growth in consumer spending, vehicle sales have been flat this year including the last three results with very little strength the call for August. The consensus for August unit vehicle sales is a 16.9 million rate vs 16.8 million in July which was the lowest showing since August last year. Looking at just domestic-made unit sales, the consensus is calling for a slight decline, to a 13.0 million rate vs July's 13.1 million.

Thursday

ADP, Private Payrolls for August

Consensus Forecast: 182,000

Consensus Range: 170,000 to 205,000

Econoday's consensus for ADP's private payroll estimate in August is 182,000 which would compare with 219,000 in ADP's July estimate and against 170,000 in the government's data for July. ADP sharply over-estimated July's strength in the labor market after underestimating strength in the prior two reports.

Initial Jobless Claims for September 1 week

Consensus Forecast: 213,000

Consensus Range: 205,000 to 217,000

Initial claims are expected to come in at 213,000 in the September 1 week, unchanged from the prior week. The 4-week average in the prior week, at 212,250, hit a 50-year low.

Nonfarm Productivity, 2nd Estimate, 2nd Quarter

Consensus Forecast, Annualized Rate: 3.0%

Consensus Range: 2.8% to 3.2%

Unit Labor Costs

Consensus Forecast, Annualized Rate: -1.0%

Consensus Range: -1.1% to -0.7%

A sharp rise in the growth of output together with slowing growth in the number of hours worked made for a sizable 2.9 percent rise in the first estimate of second-quarter productivity and, along with slowing growth in compensation, pulled down labor costs which fell 0.9 percent. Expectations for the second estimate of nonfarm productivity are 3.0 percent and minus 1.0 percent for unit labor costs.

PMI Services for August Final

Consensus Forecast: 55.2

Consensus Range: 55.2 to 55.7

Reflecting slowing in orders and employment, PMI services sank back 1 point at the mid-month August flash, coming in at a still very solid 55.2 though down from 56.2 in the final reading for July. The consensus for the final reading of August is for no change from the flash, at 55.2.

Factory Orders for July

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

Consensus Range: -1.2% to -0.4%

Advance data on the durables side of the factory orders report showed a sharp aircraft-related decline at the headline level which, however, masked a very strong showing for core capital goods. Forecasters see factory orders in July, which will include initial data on non-durable goods, slipping 0.7 percent.

ISM Non-Manufacturing Index for August

Consensus Forecast: 56.8

Consensus Range: 55.5 to 57.5

Re-acceleration is what forecasters expect for ISM's non-manufacturing index for August, at a consensus 56.8 vs a 55.7 in July that came in below Econoday's consensus range. Despite the softening in July, input costs continued to accelerate.

Friday

Nonfarm Payrolls for August

Consensus Forecast: 198,000

Consensus Range: 150,000 to 237,000

Unemployment Rate

Consensus Forecast: 3.8%

Consensus Range: 3.8% to 3.9%

Private Payrolls 

Consensus Forecast: 190,000

Consensus Range: 160,000 to 237,000

Manufacturing Payrolls 

Consensus Forecast: 21,000

Consensus Range: 12,000 to 29,000

Participation Rate

Consensus Forecast: 62.8%

Consensus Range: 62.7% to 62.9%

Average Hourly Earnings

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

Consensus Range: 0.2% to 0.3%

Average Hourly Earnings

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

Consensus Range: 2.7% to 2.8%

Average Workweek

Consensus Forecast: 34.5 hours

Consensus Range: 34.4 to 34.5 hours

In what is expected to be a strong August report, a 198,000 rise is Econoday's consensus for nonfarm payrolls with the unemployment rate seen falling 1 tenth to 3.8 percent. A 0.3 percent increase is the call for monthly average hourly earnings with this year-on-year rate also expected to rise 1 tenth, to 2.8 percent. Private payrolls are seen rising 190,000 with manufacturing payrolls expected to show another very solid increase at a consensus 21,000. The workweek is seen unchanged at 34.5 hours with the labor participation rate down 1 tenth to 62.8 percent.