Talk about a climax, the week culminates with the monthly Employment Situation Report. Census Bureau hiring and firing have swished and swayed nonfarm payrolls over the last few months like the waves on the Jersey Shore. The tide is going out now, as economists see an increase to the unemployment rate for July.
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A duo of economic reports reached the wire Monday morning at 10:00 AM. The Institute for Supply Management (ISM) posted its Purchasing Managers Index for the month of July, and the US Census Bureau reported on Construction Spending for the month of June.
ISM's PMI Report showed its manufacturing index slipped to 55.5%, from June's mark of 56.2. While a reading above 50 signifies economic expansion, the month's data continued a three-period trend of decrease in the index from April's high of 60.4. Even more troubling, the New Orders Index fell five full points to 53.5%, to depths not seen since the economy first exited recession at this time last year.
The Census Bureau data covering Construction Spending, showed an increase of 0.1% for June. The change compared against a 1.0% drop in May, so it's not so impressive. Economists, however, were looking for a decline of 0.5%.
Domestic Motor Vehicle Sales will be reported by the major automakers for the month of July throughout the day Tuesday. Economists surveyed by Bloomberg seen the annual rate of sales 8.8 million, which would mark a decent increase from June's sales levels of 8.3 million. May's sales, however, ran at a rate of 8.9 million.
The International Council of Shopping Centers (ICSC) reports on same-store sales for the period ended July 31. The premarket release will compare against prior week growth of 0.6%, and year-over-year growth of 3.8%. We would continue to expect to find sales within a range of -0.5% to +0.5% week-over-week in the near-term.
Personal Income & Outlays will be reported for the month of June at 8:30 AM. Investors will key on Personal Spending, which is seen increasing 0.1% in June. The result will compare against May's 0.2% rise and April's stagnant state. The Fed's favored gauge of inflation is found in this report. The Core PCE Price Index is expected to post a 0.1% increase, versus May's 0.2% increase. Personal income is forecast to increase 0.1%, versus May's 0.4% increase.
Factory Orders are due at 10:00 AM. The report covering June activity is seen showing a 0.5% decline. This will compare against May's 1.4% decline. Nondurable goods orders played a significant role last time around, due to energy price decline. However, both durable and nondurable orders fell. Pending Home Sales will be reported for the month of June at 10:00 AM. May's sales activity was more than just notable, as sales activity dropped 30% on the expiration of the home purchase tax incentive.
In DC news, the Senate Budget Committee will hear testimony from Morgan Stanley's (NYSE: MS) Richard Berner, who will discuss his economic expectations. The New York Society of Security Analysts will hold a forum on the economy as well Tuesday.
The corporate news wire offers the introduction of Research in Motion's (NYSE: RIMM) new smartphone. Rumor has it that RIM also has a product in development to compete against Apple's (Nasdaq: AAPL) iPad. Abbott (NYSE: ABT) will present at the Wedbush Morgan Securities Life Sciences Best Ideas Conference. Corning (NYSE: GLW) and National Instruments (Nasdaq: NATI) meet with investos Tuesday. The earnings schedule highlights news from Anadarko Petroleum (NYSE: APC), Chesapeake Energy (NYSE: CHK), Baker Hughes (NYSE: BHI), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), Duke Energy (NYSE: DUK), Emerson Electric (NYSE: EMR), The Dow Chemical Co. (NYSE: DOW), Marsh McLennan (NYSE: MMC) and Mastercard (NYSE: MA).
Two labor market reports key Wednesday's wire, with ADP and Challenger datapoints due. Challenger, Gray & Christmas report on Announced Corporate Layoffs at 7:30 AM. Challenger's last report for the month of June showed planned job-cuts numbered 39,358 in June, up from 38,810 in May. We are not sure where July will rank, but we see August layoffs coming as the average workweek has shrunk of late and manufacturing activity is cooling. There's no readily available consensus estimate for this datapoint.
ADP's Private Employment Report is due up at 8:15 AM. ADP's data showed private employment increased by 13K in June. A day later, the Department of Labor's data showed private payrolls increased by 83K in June. Again there is no readily available forecast for the datapoint.
The Mortgage Bankers Association reports on Weekly Applications as usual in the premarket Wednesday. Last week's report covering the period ended July 23 showed the Market Composite Index fell by 4.4%. The change was driven by a 5.9% decrease in the Refinance Index on a slight increase in mortgage rates. The Purchase Index improved by 2.0% in the period.
ISM reports on its Non-Manufacturing Index at 10:00 AM Wednesday. The index fell to its lowest level since February, falling 1.6 points to 53.8% in June. Economists are looking for a lower reading in July, to 53.0%.
The EIA reports on Petroleum Status at 10:30 each Wednesday. Last week's report covering the period ended July 23 showed crude oil inventory increased by 7.3 million barrels. Crude levels remain above the upper limit of the average range for this time of year. Gasoline stores increased by 0.1 million barrels and are also above the upper limit of the average range for this time of year.
The Monster Employment Index, produced by Monster World Wide (NYSE: MWW), meets investors in the early AM. The MEI improved dramatically in June, rising seven points to 141. Perhaps seasonal drivers led the index to perform better than all other employment metrics, as accomodation and food services led all sectors. Retail Trade and Finance posted declines, and should prove more reliable for a good measure of online job demand.
Weekly Initial Jobless Claims will be reported at 8:30 as always. For the week ended July 24, new benefits filers declined by 11K, to 457K. The four-week moving average of claims filers numbered 452,500, an decrease of just 4,500.
Chain Store Sales will be reported for the month of July throughout the day. Store sales softened in June, and we expect more of the same for July and August, excluding the typical back-to-school boost.
The EIA's Natural Gas Report is due at 10:30. Last week's report covering the period ended July 23 showed an increase in nat gas inventory of 28 Bcf. Inventory stood 94 Bcf below last year's levels, we believe on increased demand for electricity on a hotter July. Stocks still stood 239 Bcf above the 5-year average for this time of year.
Both the Bank of England and the European Central Bank meet and offer monetary policy on Thursday.
Corporate news keys on Merck (NYSE: MRK), which presents at the BMO Capital Markets Focus on Healthcare Conference. The earnings schedule highlights data from Viacom (NYSE: VIA), Cardinal Health (NYSE: CAH), Kraft Foods (NYSE: KFT), CIGNA (NYSE: CI), Watson Pharmaceuticals (NYSE: WPI) and The Progressive (NYSE: PGR).
The Employment Situation Report headlines Friday's newswire. July's report is expected to show a slight increase in unemployment to 9.6%. We think 9.7% is possible here, so a hedge might play well ahead of the data. Nonfarm Payrolls are seen falling by 70K this month, though after exclusion of the census jobs and other public jobs, private payrolls are expected to increase by 100K. The average workweek is seen holding at 34.1 hours, after dropping a tenth of a point in June.
Look toward the Consumer Credit Report at 3:00 PM. June's report is expected to show a $5.0 billion contraction in credit. The contraction follows even sharper tightening in May and April of $9.1 and $14.9 billion, respectively.
The Senate goes on recess starting Friday. The corporate news schedule highlights earnings from AIG (NYSE: AIG), Progress Energy (NYSE: PGN), The Washington Post (NYSE: WPO), Pepco Holdings (NYSE: POM), Southwestern Energy (NYSE: SWN) and AboveNet Inc. (Nasdaq: ABVT).
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