WEEKLY MARKET SNAPSHOT 28/8-1/9 |Non Farm Payroll; employment and unemployment data, USA consumer confidence, USA GDP and global PMIs are the major high impact calendar events for the coming week
It’s a busy week for high impact, economic calendar events, with the main focus on the USA. The week ends with the NFP data. A fall in the job creation numbers is expected, as the USA now begins to reach what’s being (theoretically) termed “full employment”; the unemployment rate fell back to its sixteen year low last month, of 4.3%. The question, in terms of job prospects, is how many more jobs can be created, in an economy that’s developing all the signs of topping out, or stagnating? Despite the regular job creation, the continuing jobs claim data remains stubbornly high, whilst the employment participation rate remains low at circa 62% and the annual wage rises (at circa 2.3%), is close to the CPI inflation rate. USA citizens have witnessed the value of the dollar and their savings eradicate, whilst data reveals that since 2010, the USA has lost circa 2 million manufacturing jobs and replaced them with 2 million service jobs.
It’s a big week for Markit Economics PMIs, and it’s worth reminding ourselves how valuable these readings are. Many of us are aware of the difference between leading and lagging technical indicators, and PMIs have an arguably unique place, in terms of fundamental analysis, given they’re considered to be leading (not lagging), fundamental indicators of economic performance. By definition, Markit are continually asking question of tens of thousands of purchase managers such as; “where do you see your various markets heading, in the near to medium term, are your orders up, or down?”
Sunday begins the week with the publication of Germany’s retail data, at a current rate of 1.5% YoY, there is general consensus that a similar figure will be maintained. China’s industrial profits YoY are published, expected to maintain the momentum generated by the previous month’s figure of 19.1%.
Monday starts with the UK’s nationwide house price data for June, expected to reveal the YoY rise maintained, at the circa 2.9% growth rate revealed in July. USA wholesale inventories for July are the next significant calendar event, expected to reveal an improvement, from the 0.7% recorded in June. Advanced goods trade balance data for July is forecast to reveal a deteriorating deficit; down to -$65.2b for the month, versus -$63.9b in June. Various Japanese data, including the jobless rate and household spending, will be published late evening.
Tuesday witnesses the German GfK consumer confidence reading published, followed by French GDP, for both the month and YoY. At a current rate of 1.8% growth per annum, analysts will be looking for France GDP growth to be maintained at similar levels. As attention turns to the USA, the various Case Shiller house price data readings are published. The current YoY house price inflation rate is 5.7%, investors are expecting a similar level to be maintained. USA consumer confidence is also published, a fall to 119, from 121.1 is forecast. Late evening New Zealand’s housing permit data for July will be revealed, the day’s calendar events end with Japanese data on retail trade; the current rate of 2.1% growth is predicted to remain constant.
Wednesday will reveal construction data for Australia; building approvals fell by -2.3% in June, investors and analysts will be looking for an improvement. Japan’s small business confidence is expected to maintain a similar level to July’s 50 reading. As focus turns to Europe, the UK’s consumer credit data is expected to stay at a level similar to the £1.5b growth in June. Mortgage approvals and secured lending on dwellings for the U.K. is also published. Various sentiment and confidence readings for the Eurozone are published on Wednesday, as is Germany’s CPI, expected to reveal little change on the current 1.7% key inflation level. Attention then moves onto the USA, with Q2 GDP published, annually the expectation is for a fall from 2.6% to 2.5%. Various other USA inflation data is also published including consumption and expenditure. The previous week’s energy inventories are also made public. Late evening the GfK consumer confidence reading for the U.K. is revealed, an improvement from -12 is sought. Late evening Japan’s industrial production data for July is revealed, the current level of 5.5% is predicted to remain constant.
Thursday New Zealand’s activity and business outlook data is published, Australia’s private sector credit and private capital expenditure figures are revealed, China’s manufacturing and non manufacturing PMIs are published. Japan’s latest housing starts are revealed, as are the construction order numbers for Japan. As attention then shifts to Europe, German and Eurozone unemployment data is published. Eurozone’s CPI figure is printed, forecast to maintain at 1.3% YoY. North American data begins in the form of Canada’s GDP figure, with the current YoY rate at 4.6% expected to be maintained. Thursday’s continuing claims and new unemployment claims are traditionally published for the USA on the day, as is a raft of USA inflation data, with the personal consumption expenditure figure forecast to remain at circa 1.5% growth YoY. Pending home sales data is also revealed for the USA.
Friday begins with Swiss retail data, China’s Caixan manufacturing PMI is published, as is Japan’s vehicle sales and consumer confidence data. From Europe Italy’s latest GDP figure is revealed and is expected to maintain a 1.5% growth rate, we receive the PMI readings for several countries including the Eurozone’s manufacturing PMI. As focus moves to the USA the latest NFP data will once again dominate investor attention and analyst narrative. The forecast is for a fall to 180k jobs created in August, from the 205k created in July. The USA unemployment rate is expected to come in close to the current 16 year low figure of 4.3%. Average earnings are expected to remain unchanged at 2.5%. Canada’s manufacturing PMI is published, as are the latest ISM manufacturing and employment readings. Construction spending for the USA is expected to come in at 0.6% for July, an improvement from the -1.3% registered in June.