Key Events In The Coming Week: All Eyes On Payrolls

The key economic release this week is the employment report on Friday, which as Janet Yellen noted in her speech on Friday, is the only economic event (together perhaps with the CPI report on April 15), that could potentially derail a now practically guaranteed rate hike.

Following a slew of hawkish Fed commentary throughout last week and reinforced by both Fischer and Yellen on Friday, a March 15th Fed hike looks firmly on the cards and it would seem unlikely that data would cause a change of course. Nevertheless, attention will be squarely on Friday's jobs report. Consensus expects a strong report, with NFP growth of 190K, average hourly earnings of 0.3% and unemployment ticking down to 4.7%.

A summary breakdown of key events in the US in the coming week:

In addition to the US jobs report, two G10 Central Bank decisions this week, as the RBA and ECB meet to decide policy. Neither bank is expected to change policy, although more interesting times are likely ahead as both now face rising inflationary pressures which will likely prompt them to turn hawkish in the coming months. There is a more compelling case for the RBA to begin normalizing policy next year, but doubt the RBA will shift guidance this week. Look for moves in Feb and Aug 2018.

The ECB will also be on hold as the current "truce" between hawks and doves holds and is reflected in a dovish tone, with no decision. After the summer, the debate between hawks and doves cannot be avoided however. Keep an eye on the batch of forecasts released by ECB, though few expect revolutionary changes.

Elsewhere, in the UK, the Budget announced on Wednesday is a key release, while we also get trade balance and industrial production. The House of Lords continues their examination of the Brexit Bill. Following the completion of third reading, the bill will return to the Commons for consideration of Lords amendments.

In Japan, main economic releases include trade balance, final GDP, PPI and money supply.

In Canada, the main release will be the labor market report.

In Norway, data this week will be the last main inputs for the Norges Bank meeting on March 16th. Particular focus will be on the regional network survey and inflation.

Detailed breakdown of global events below:

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A daily look at key events:

It looks set to be a quiet start to the week with just the Sentix investor confidence reading for the Euro area due this morning followed by January factory orders and final durable and capital goods revisions in the US this afternoon.

Tuesday kicks off in Germany with the January factory orders data, before we then get the Q4 GDP report for the Euro area. Over in the US tomorrow data includes the January trade balance and consumer credit prints.

Wednesday starts in Japan where the final Q4 GDP revisions are due before we then get February trade numbers in China. During the European session we will get Germany industrial production and France trade data. In the US the focus will likely be on the February ADP employment change print, while Q4 nonfarm productivity and unit labour costs along with wholesale inventories and trade sales data is also due.

Kicking off Thursday is China where the February CPI and PPI prints are due. In Europe we’ll then get business sentiment data in France before all eyes turn to the ECB meeting just after midday followed by Draghi’s press conference. Over in the US the data includes the import price index and initial jobless claims.

We end the week on Friday in Europe with trade data in  Germany and industrial production data in France and the UK, along with trade data in the latter. Over in the US we’ve then got the February  employment report including the all important payrolls print.

Fedspeak this week is light with just Kashkari due to speak today. Away from that BoE Governor Hogg speaks today while Germany’s Schaeuble speaks on Thursday. Other important events to keep an eye on this week include the House of Lords completing its scrutiny of the Brexit bill on Tuesday and UK Budget on Wednesday. An EU summit of country leaders also starts on Thursday.

Detailed breakdown of global events below:

Finally, here is Goldman's summary of key events with sellside estimates for the key US events of the week:

Monday, March 6

  • 10:00 AM Factory orders, January (GS +1.2%, consensus +1.0, last +1.3%); Durable goods orders, January final (last +1.8%); Durable goods orders ex-transportation, January final (last -0.2%); Core capital goods orders, January final (last -0.4%); Core capital goods shipments, January final (last -0.6%): We expect factory orders to rise 1.2% following a 1.3% increase in December. Last week’s durable goods report showed new durable goods orders were firm, while core capital goods orders were softer.
  • 03:00 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Federal Reserve Bank President Neel Kashkari will give a speech at the annual NABE Economic Policy Conference in Washington D.C.

Tuesday, March 7

  • 08:30 AM Trade balance, January (GS -$47.5bn, consensus -$48.0bn, last -$44.3bn): We expect the trade deficit to widen in January. The Advance Economic Indicators report last week showed a wider goods trade deficit and strong consumer goods imports—likely related to the relatively early Chinese New Year—that we anticipate will not be fully offset by a modest improvement in the services balance.
  • 03:00 PM Consumer credit, January (consensus +$17.2bn, last +$14.2bn)

Wednesday, March 8

  • 08:15 AM ADP employment report, February (GS +200k, consensus +185k, last +246k): We expect a 200k gain in ADP payroll employment in February, reflecting stable hiring trends, a further decline in initial jobless claims, and a rise in leading indicators. The ADP report introduced methodological changes with the October release and now offers more details by sector. 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.
  • 08:30 AM Nonfarm productivity (qoq saar), Q4 final (GS +1.5%, consensus +1.5%, last +1.3%);  Unit labor costs, Q4 final (GS +1.6%, consensus +1.6%, last +1.7%): We expect a +0.2pp revision to nonfarm productivity in Q4 to an annualized rate of +1.5% – double the post-recession trend pace of +0.75% – driven by the upward revision to nonfarm business output in last week’s GDP report. We expect unit labor costs – compensation per hour divided by output per hour – to be revised down 0.1pp to +1.6%.
  • 10:00 AM Wholesale inventories, January final (last -0.1%)

Thursday, March 9

  • 08:30 AM Initial jobless claims, week ended March 4 (GS 245k, consensus 239k, last 223k); Continuing jobless claims, week ended February 28 (last 2,066k): We expect initial jobless claims to rise 22k to 245k, as we believe last week’s 19k drop reflected the unusual timing of automotive plant shutdowns as well as New York school holidays, both of which imply a rebound in coming weeks. Even after accounting for temporary factors, the trend pace of initial jobless claims continues to drift lower. We also note the year-to-date improvement in several energy-producing states, where claims remained low again this week.
  • 08:30 AM Import price index, February (consensus +0.1%, last +0.4%): Consensus expects import prices to increase at a slower pace in February (nsa). In the January report, the headline index advanced 0.4%, primarily driven by a pickup in petroleum and industrial goods prices.
  • 10:00 AM Quarterly Services Survey, Q4: The Quarterly Services Survey includes data on revenue for service sector firms. The Commerce Department uses this information for estimating services spending in the third release of the GDP report.

Friday, March 10

  • 8:30 AM Nonfarm payroll employment, February (GS +190k, consensus +190k, last +227k); Private payroll employment, February (GS +200k, consensus +185k, last +237k); Average hourly earnings (mom), February (GS +0.3%, consensus +0.3%, last +0.4%); Average hourly earnings (yoy), February (GS +2.7%, consensus +2.8%, last +2.5%); Unemployment rate, February (GS 4.7%, consensus 4.7%, last 4.8%): We expect February nonfarm payrolls to increase 190k following a 227k increase in January and compared to the three-month moving average of +183k. We expect job growth to be supported by encouraging employment surveys and a further drop in jobless claims, which averaged 244k during the payroll month (the lowest level since the 1970s). February also exhibited unseasonably warm weather and relatively limited snowfall, both of which should boost payrolls in weather-sensitive categories.
  • On the negative side, the federal hiring freeze (excluding defense and public safety) announced in late January is likely to weigh on government payrolls, and we expect a net decline in these categories of roughly 10-15k in the month. The extent of the headwind on overall payroll growth may be mitigated by the ability of government departments to circumvent the hiring freeze, for example through reduced attrition or increased contracted hiring. We also expect below-trend payroll growth in the transportation and warehousing industry, following elevated temporary hiring in Q4 related to strong online holiday shipments.
  • We expect the unemployment rate to fall one-tenth to 4.7%, driven by continued household employment growth and a potential pullback in the participation rate following last month’s 0.2pp rise. Finally, we expect average hourly earnings to increase 0.3% month over month and 2.7% year over year, reflecting firming wage growth and the continued impact of state-level minimum wage hikes.
  • 02:00 PM Monthly budget statement, February (consensus -$151.0bn, last +$51.3bn)

Source: BofA, Goldman, DB


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