Key Events In The Coming Week: A Negative Payrolls Number And Non-stop Fed Speakers

Tyler Durden's picture

While central banks step away from the spotlight, as does Asian data and markets with China and South Korea both taking a weeklong break, there will be a bevy of central bank speakers to "explain" what is going on while it will be a busy week data wise, with the US employment trade balance report due this week, PMI and retail sales in Euro area, as well as PMI and house prices in UK. The key central bank events include the Australia RBA board meeting, ECB minutes,Yellen and Fed member speeches. In Emerging Markets, there are monetary policy meetings in India, Poland and Romania.

Key focus: the busy calendar ahead for US

Next week attention will be on the US employment report, trade balance and durable goods orders. Forecasts for nonfarm payrolls (due Friday) are scattered with many expecting a big drop - many predict an outright negative payrolls print - as Hurricane Irma hit right at the start of the survey week. Otherwise, incoming data remains supportive of job gains. ADP (Wed) will likely report private payrolls increased by 73k. The ISM manufacturing index (Mon) is expected to dip to 58.0 from 58.8, supported by better-than-expected readings from regional surveys and ISM non-manufacturing to rise to 55.5 in September from 55.3.

Looking aroudn the world, focus will fall on the RBA meeting, ECB minutes and Fed speakers

The RBA board meets on Tuesday and we are not expecting any major evolution of wording despite a more upbeat tone from recent RBA communication. While policy normalization is on the agenda for next year, the Bank continues to stress patience in shifting from a neutral stance. We also have ECB board minutes from its September meeting on Thursday. The expected path for monetary policy is a key driver for the euro dollar and this constraints the ECB's policy options. In US, Chair Yellen speaks at St. Louis Fed conference on Community Banking on Wednesday.

Also of note, according to press reports, the ruling LDP party in Japan plans to move ahead with raising the consumption tax from 8% to 10% in October 2019. This would be the third time Japan has undercut efforts to create normal 2% inflation by raising the consumption tax. As we saw in 1997, timing is critical. Setting a fixed date risks shocking the economy at a time of vulnerability. As we saw in 2014, the tax increase is unlikely to be offset by enough spending increases to prevent a sharp shock to growth.

DB's Jim Reid breaks down the key events on a daily basis:

  • In terms of data, the focus this morning in Europe will be on the final revisions to the September manufacturing PMIs which will also include a first look at the data for the periphery and UK. Also due out is the August unemployment rate for the Euro area. Over in the US this afternoon we’ve got the September ISM manufacturing print as well as the final September manufacturing PMI and August construction spending readings.
  • Tuesday looks to be a fairly quiet day for data with Japan consumer confidence, Euro area PPI and US vehicle sales data the only releases of note.
  • Wednesday kicks off in Japan with the September Nikkei services and composite PMIs. In Europe we’ll receive the remaining September PMIs (services and composite) along with the latest retail sales data for the Euro area. The focus in the US on Wednesday will likely be on the September ADP employment print and ISM non-manufacturing. The final services and composite PMIs are also due.
  • Turning to Thursday, with no data of note in Europe the focus across the pond in the US will be on the latest weekly initial jobless claims print, August trade balance, August factory orders and the final durable and capital goods order revisions for August.
  • We finish the week in Europe on Friday with factory orders data in Germany, trade data in France and house prices data in the UK. The big focus on Friday however will be in the US with the September employment report due out including nonfarm payrolls, average hourly earnings and the unemployment rate. Wholesale inventories and consumer credit data for August round out the releases.

Onto other events:

  • Today sees the UK’s Chancellor of the Exchequer Hammond will address the Conservative Party Conference. In Japan, the BOJ’s quarterly Tankan survey of large manufacturers will be out. In the US, the Fed’s Kaplan will speak.
  • Then onto Tuesday, there will be numerous speakers at the Conservative Party conference, including: UK home secretary Rudd, Trade secretary Fox, Brexit secretary Davis and Foreign secretary Johnson. Then the BOE will publish its record of the Financial policy committee. Over in the US, the Fed’s Powell will speak on regulatory reform.
  • Turning to Wednesday, the EU parliament will vote on a non-binding Brexit resolution, while Mrs Yellen will give opening remarks at a Community banking conference in the US.
  • Then onto Thursday, the ECB’s Praet and Coeure chairs a panel in Frankfurt and the ECB’s governing council members Liikanen and Jazbec will speak. Following on, the ECB will also publish accounts of its September meeting. In the UK, BOE’s Chief economist Haldane will speak on “Central banks engagement with society”. Over in the US, there are four Fed speakers, including: Williams, Harker, Powell and George.
  • Finally, on Friday, BOE’s Chief economist Haldane speaks on “Trust in institutions”. In the US, we round out the week with three more Fed speakers, including: Bostic, Dudley and Kaplan.

Finally, here is Goldman's Jan Hatzius with a focus only on the US alongside consensus expectations:

The key economic releases this week are the ISM manufacturing index on Monday, the ISM non-manufacturing index on Wednesday, and the employment report on Friday. There are several speaking engagements by Fed officials this week, including a speech on financial regulatory reform by Fed Governor Powell on Tuesday.

Monday, October 2

  • 09:45 AM Markit US Manufacturing PMI, September (consensus 53.0, last 53.0)
  • 10:00 AM ISM manufacturing index, September (GS 59.0, consensus 58.0, last 58.8): Regional manufacturing surveys strengthened on net in September, with notable gains in the Richmond Fed, Philly Fed, Dallas Fed, and Chicago PMI surveys. Our manufacturing survey tracker moved up 1.3pt to 59.4 in September. We expect the ISM manufacturing index to edge up 0.2pt to 59.0, reflecting firmer manufacturing sector activity, partly offset by disruptions from the recent hurricanes.
  • 10:00 AM Construction spending, August (GS +0.5%, consensus +0.4%, last -0.6%): We expect construction spending to strengthen 0.5% in August following a 0.6% decline in the July report, reflecting an expected rebound in single-family construction.
  • 02:00 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will speak in a moderated Q&A session in El Paso, Texas. Audience Q&A is expected.

Tuesday, October 3

  • 08:30 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will give a speech on regulatory reform at the George Washington University. Audience Q&A is not expected.
  • 4:00 PM Total vehicle sales, September (GS 17.2mn, consensus 17.0mn, last 16.0mn): Domestic vehicle sales, September (GS 13.8, consensus 12.7mn, last 12.5mn)

Wednesday, October 4

  • 8:15 AM ADP employment report, September (GS +130k, consensus +143k, last +237k): We expect a 130k increase in ADP payroll employment in September, reflecting a drag from the various financial and economic indicators used in ADP's model. However, we do not expect the hurricanes to meaningfully impact the report. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 09:45 AM: Markit US Services PMI, September (consensus 55.1, last 55.1)
  • 10:00 AM ISM non-manufacturing index, September (GS 55.7, consensus 55.5, last 55.3): We expect the ISM non-manufacturing index to rebound 0.4pt to 55.7, despite a modest drag from hurricane effects. Regional non-manufacturing surveys were mixed in September, with deterioration in the NY Fed and Dallas Fed surveys, a flat Richmond Fed reading, and a moderate gain in the Philly Fed survey. Overall, our non-manufacturing survey tracker ticked down 0.1pt to 56.5 in September.
  • 03:00 PM St Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President Bullard will give welcoming remarks at a conference on community banking at the Federal Reserve Bank of St. Louis. Audience Q&A is not expected.
  • 03:15 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give brief welcoming remarks at a conference on community banking at the Federal Reserve Bank of St. Louis. Audience Q&A is not expected.

Thursday, October 5

  • 08:30 AM Initial jobless claims, week ended September 30 (GS 265k, consensus 263k, last 272k): Continuing jobless claims, week ended September 23 (consensus 1,949k, last 1,934k)
  • 08:30 AM Trade balance, August (GS -$43.0bn, consensus -$42.7bn, last -$43.7bn): We estimate the trade deficit narrowed by $0.7bn in August. The Advance Economic Indicators report last week showed a smaller goods trade deficit, but we expect this to be offset by a modest deterioration in the services trade balance.
  • 09:10 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Powell will give a speech on treasury markets at the Federal Reserve Bank of New York. Audience Q&A is expected.

    09:15 AM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President John Williams will give the keynote speech at a conference on community banking at the Federal Reserve Bank of St. Louis.

  • 09:30 AM Philadelphia Fed President Harker (FOMC voter) speaks: Philadelphia Fed President Patrick Harker will give a speech at the Investing in America’s Workforce Capstone Conference in Austin. Audience Q&A is expected.
  • 10:00 AM Factory orders, August (GS +1.1%, consensus +1.0%, last -3.3%); Durable goods orders, August final (last +1.7%); Durable goods orders ex transportation, August final (last +0.2%); Core capital goods orders, August final (last +0.9%); Core capital goods shipments, August final (last +0.7%): We estimate factory orders increased 1.1% in August following a 3.3 % decline in July. Core measures in the August durable goods report were strong, with solid growth in core capital goods orders and shipments.
  • 04:30 PM Kansas City President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will give a speech at the Investing in America’s Workforce Capstone Conference in Austin.

Friday, October 6

  • 08:30 AM Nonfarm payroll employment, September (GS +50k, consensus +85k, last +156k); Private payroll employment, September (GS +40k, consensus +73k, last +165k); Average hourly earnings (mom), September (GS +0.4%, consensus +0.3%, last +0.1%); Average hourly earnings (yoy), September (GS +2.7%, consensus +2.5%, last +2.5%); Unemployment rate, September (GS 4.5%, consensus 4.4%, last 4.4%): We estimate nonfarm payrolls rose 50k in September, following a 156k increase in August and compared to three- and six-month moving averages of 185k and 160k, respectively. Our forecast reflects a large drag from Hurricanes Harvey and Irma, which we estimate could temporarily reduce the level of payroll employment by 125k. FEMA major disaster declarations for these storms covered over 10% of the US population, and over 6.5 million Floridians were without power in the middle of the payroll survey week. Additionally, the Bureau of Labor Statistics anticipates that the hurricanes will have both direct and indirect effects on employment. However, we believe the underlying pace of job growth remains firm, as jobless claims remain very low outside of hurricane-affected regions. We estimate the unemployment rate rose a tenth to 4.5%, reflecting temporary hurricane effects. The August unemployment rate barely rounded down (at 4.442%), and in the month after Hurricane Katrina, there was a sharp increase in Louisiana unemployment. Finally, we expect average hourly earnings to increase 0.4% month over month and 2.7% year over year, reflecting positive calendar effects.
  • 09:15 Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will give a speech at the Investing in America’s Workforce Capstone Conference in Austin.
  • 10:00 AM Wholesale inventories, August final (consensus 1.0%, last 1.0%)
  • 11:45 AM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Fed President Eric Rosengren will give a speech at the International Economic Conference in Montreal.
  • 12:15 PM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give a speech at an event organized by the Council for Economic Education. Audience Q&A is expected.
  • 12:45 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will give a speech at the Investing in America’s Workforce Capstone Conference in Austin.
  • 01:50 PM St Louis Fed President Bullard (FOMC non-voter) speaks: St Louis Fed President James Bullard will give a speech titled “Standard of Living Across US Metropolitan Statistical Areas” at the Bi-State Development Annual Luncheon in St. Louis.
  • 03:00 PM Consumer credit, August (consensus $15.5bn, last $18.5bn)

Source: BofA, DB, Goldman

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

Equities at "all time highs" while going on years of "full employment" and yet the bankers and financiers still have access to all the free/cheap money they want?!?!?!?!

Your move Mr. Yellen!!!

 

FreeShitter's picture

"I got you by the balls lop"..   ----J.yellen 

Endgame Napoleon's picture

If the jobs are not full time and non-temp, with pay high enough to cover the cost of housing and other major bills, the "job growth" does childless, single, working-age people like me no good.

If the so-called "jobs" do not pay enough or lack sufficient hours to cover the cost of rent and other large monthly expenses without the need for unearned income from a spouse, an ex spouse, monthly welfare that covers the cost of rent and groceries, child tax credits that equal 4 months of pay or SS retirement income, the "job growth" does people like me no good.

Solution of Uniparty politicians: Hand out more unearned income to parents who already have unearned income from spouses, adding to the number of job seekers with unearned income from welfare, child support, child tax credits and retirement, enabling them to work part-time and for low pay, and making the job scene even worse for citizens who lack unearned income from government, spouses, ex spouses, etc.

buzzsaw99's picture

the fedheads are on my permanent :ignore: setting.

Arnold's picture

This Balance sheet reduction has all the night vermin acting quiet and spooky.
Krug, Cash N Carry, Summers. Granma.
Maybe it's just my reading material.

The only chirpy Economist of Note is NoDebt.

buzzsaw99's picture

i already know what they're going to do, they don't, and even if they did know what they were going to do they wouldn't give us the straight poop anyway.  their words are just meant to mislead us.

Iskiab's picture

Of course. Truth is they have no idea what will happen, so they're not sure how to spin it into a positive yet. They need to be able to frame it to sell it, like interest rate 'normalization' which wasn't challenged. Normalization really means increasing rates without any data to back it up but a simple word 'normalization' was enough to get people to buy in.

Don't get me wrong, stopping QE is a good thing, but raising rates right now is insane. Higher rates mean no more wealth effect, and less disposable income for consumers at a time when the economy isn't booming.

LawsofPhysics's picture

LOL!!!  Good luck with that cognative disonance!!!!  The "wealth effect" is why people can no longer afford equities, rent, education, healthcare, etc. etc.!!!!!!

That's a good sheep!