After last week's relatively quiet economic calendar and focus on Central Banks, when we finally heard from both Chair Yellen and Mario Draghi on Friday, attention this week turns back to data. In a relatively busy data week ahead - particularly for the US - focus will likely be on Friday's NFP, Q2 GDP revision on Wednesday, ISM manufacturing reports on Friday and inflation prints from the Eurozone.
Key events across the globe:
- Wednesday: US GDP (Q2, 2nd)
- Thursday: US PCE Data (Jul), China Official PMIs (Aug)
- Friday: US Labour Market Report (August), Eurozone CPI (Aug, P), Canadian GDP (Q2), China Caixin PMI (Aug)
The key economic report will be Friday's nonfarm payrolls, where consensus expect a 170K increase in paryolls for August, down from 209k in July, implying a slowdown from the 3-month moving average of 190k, albeit with a higher probability of seasonal bias. Markets will look to wage growth to gauge the Fed's next steps - Wall Street expects a steady 0.2% m/m (2.6% y/y) increase in wages - though this week also brings core PCE data - the Fed’s preferred measure of inflation - which is expected to edge down to 1.4% y/y, moving further away from the Fed's 2% target.
Meanwhile in the Eurozone, inflation comes into the spotlight ahead of the following week's ECB meeting. A 1.4% CPI y/y print is expected. Ahead of the ECB’s meeting on the 7th of September the board enters a quiet period and Vitor Constâncio and Ewald Nowotny are likely to steer clear of discussion of monetary policy at their appearances on Friday. However, we will watch the language of German Finance Minister Wolfgang Schäuble (Sunday) for clues as to the expected position of the CDU on QE and the ECB if it forms a government without the more Europhile SP.
We also have monetary policy meetings in Colombia, Korea and Israel. Sovereign rating review in Czech Republic and Lebanon.
Elsewhere, the TPP 11 continue to meet to discuss the implementation of the trade pact without the US. Numerous other leaders travel to meet counterparts, amongst others: Emmanuel Macron hosts Angela Merkel (Monday); Vladimir Putin travels to Hungary for talks with Viktor Orban (Monday); Theresa May visits Japan with a UK trade delegation; Xi Jinping hosts the leaders of the BRICS nations.
A breakdown of key events day by day from Deutsche Bank:
- Today kicks off with the Eurozone’s M3 money supply stats for July. Then Italy’s August confidence indicators for consumer, manufacturing and the broader economy are due. Over in the US, there is the August and July wholesale and retail inventories data.
- Onto Tuesday, Japan’s July jobless rate and UK’s August Nationwide house price index will be out in early morning followed by Germany’s consumer confidence index. Then France’s preliminary 2Q GDP stats and consumer spending for July are due. In the US, there is the Conference Board consumer confidence index for August and the June Case-Shiller house price indices.
- Turning to Wednesday, Japan’s July retail sales will be due in the early morning. Then we have Germany’s inflation readings for August and Italy’s July PPI data. In the UK, the July mortgage approvals and data on money supply as well as net credit lending are due. Elsewhere, the Eurozone’s August confidence indicators for business, consumer and the economy are also due. Across the pond, US’s ADP employment change for August and second readings for 2Q GDP and core PCE are due.
- For Thursday, China’s August manufacturing PMI and Japan’s July industrial production, vehicle production, housing starts and construction orders will be due in early morning, along with UK’s consumer confidence data and Germany’s July retail sales. Then we have the July unemployment rate for the Eurozone and Italy, along with the August unemployment change stats for Germany. The inflation data for the Eurozone, Italy and France are also due. Over in the US, the July PCE, personal income / spending data, initial jobless claims, continuing claims, pending home sales and Chicago business barometer are all due.
- Finally on Friday, China’s caixin manufacturing PMI for August and Japan’s capital spending for 2Q and final reading for Nikkei manufacturing PMI will be due in early morning. Then we have the final markit PMIs for Germany, Eurozone, UK, France and Italy. In the US, there is the August ISM manufacturing stats, unemployment rate and of the course the employment report for August, along with the July construction spending and University of Michigan confidence indicators
Finally, here is Goldman's focus on US events will full consensus estimates:
The key economic releases this week are the Q2 GDP revision on Wednesday and the nonfarm payrolls and ISM manufacturing reports on Friday. There is one scheduled speaking engagement by Fed Governor Powell on Wednesday.
Monday, August 28
- 08:30 AM U.S. Census Bureau Advance Economic Indicators Report; Advance goods trade balance, July preliminary (GS -$65.0bn, consensus -$64.5bn, last -$64.0bn): We estimate the goods trade deficit widened $1.0bn to $65.0bn in July. Regional port statistics suggest that inbound container volumes rebounded sharply in the month, suggestive of deterioration in the trade deficit.
- 08:30 AM Wholesale inventories, July preliminary (consensus +0.3%, last +0.7%)
- 10:30 AM Dallas Fed manufacturing index, August (consensus +16.8, last +16.8)
Tuesday, August 29
- 09:00 AM S&P/Case-Shiller 20-city home price index, June (GS +0.3%, consensus +0.1%, last +0.1%); We expect the S&P/Case-Shiller 20-city home price index to increase 0.3% in June, following a 0.1% increase in the prior month. The measure still appears to be influenced by seasonal adjustment challenges, and we place more weight on the year-over-year increase, which was 5.7% in May.
- 10:00 AM Conference Board consumer confidence, August (GS 122.5, consensus 120.4, last 121.1): We estimate that the Conference Board consumer confidence index increased 1.4pt in August following a 3.8pt increase in the month prior. The index remains close to post-crisis highs. Our forecast reflects improvement in other consumer surveys in the month.
Wednesday, August 30
- 8:15 AM ADP employment report, August (GS +200k, consensus +188k, last +178k): We expect a 200k increase in ADP payroll employment in August, reflecting a boost from the various financial and economic indicators used in ADP's model. The ADP report introduced methodological changes last fall 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 GDP (second), Q2 (GS +2.8%, consensus +2.7%, last +2.6%); Personal consumption, Q2 (GS +3.2%, consensus +3.0%, last +2.8%): We expect a two-tenths upward revision in the second vintage of Q2 GDP report (to +2.8% qoq saar), driven by a faster pace of consumption growth partially offset by a negative revision to government spending. We look for real personal consumption to be revised up 0.4pp to +3.2%. Our forecast reflects revisions to monthly source data released since the advance GDP report, as well as net strength in the consumer spending categories of the Q2 Quarterly Services Survey.
- 09:15 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will give a speech on “The Role of Boards at Large Financial Firms” at the Large-Bank Directors Conference hosted by the Chicago Fed. Audience Q&A is expected.
Thursday, August 31
- 8:30 AM Personal income, July (GS +0.5%, consensus +0.3%, last flat); Personal spending, July (GS +0.3%, consensus +0.4%, last +0.1%); PCE price index, July (GS +0.08%, consensus +0.1%, last -0.1%); Core PCE price index, July (GS +0.08%, consensus +0.1%, last +0.1%); PCE price index (yoy), July (GS +1.39%, consensus +1.4%, last +1.4%); Core PCE price index (yoy), July (GS +1.40%, consensus +1.4%, last +1.5%): We estimate a 0.5% increase in personal income and a 0.3% increase in personal spending (nominal, mom sa) in July. Based on details in the PPI and CPI reports, we estimate that the core PCE price index rose just 0.08% month-over-month in August, or 1.398% from a year earlier (vs. +1.505% in July). Additionally, we expect that the headline PCE price index rose 0.08% in August, or +1.392% from a year earlier.
- 08:30 AM Initial jobless claims, week ended August 26 (GS 240k, consensus 237k, last 234k); Continuing jobless claims, week ended August 19 (consensus 1,953k, last 1,954k): We estimate initial jobless claims rose 6k to 240k in the week ended August 26. Initial claims can be volatile around this time of year due to annual auto plant shutdowns, and we expect a rise in factory closures to boost claims for this week. Additionally, we note that the level of claims in Pennsylvania looks depressed, which could reverse in the upcoming report.
- 09:45 AM Chicago PMI, August (GS 59.5, consensus 59.2, last 58.9): Regional manufacturing surveys mostly firmed in August, and we expect the Chicago PMI to bounce back 0.6pt to 59.5 in the August report after a 6.8pt decline in the prior month.
- 10:00 AM Pending home sales, July (GS flat, consensus +0.5%, last +1.5%): New homes sales and existing homes sales both declined in July, and regional data we collect on contract signings data were also somewhat soft. Accordingly, we estimate pending home sales were unchanged in July, following a 1.5% increase in June. We have found pending home sales to be a useful leading indicator of existing home sales with a one- to two-month lag.
Friday, September 1
- 8:30 AM Nonfarm payroll employment, August (GS +160k, consensus +180k, last +209k); Private payroll employment, August (GS +150k, consensus +170k, last +205k); Average hourly earnings (mom), August (GS +0.1%, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), August (GS +2.5%, consensus +2.6%, last +2.5%); Unemployment rate, August (GS 4.3%, consensus 4.3%, last 4.3%): We estimate nonfarm payrolls rose 160k in August, following a 209k increase in July and compared to three- and six-month moving averages of 195k and 179k, respectively. Labor market fundamentals were somewhat more mixed than in previous months, as our service-sector employment tracker pulled back from a 2-year high (-1.1pt to 53.7). However, both initial and continuing jobless claims declined between the survey periods. We expect residual seasonality to weigh on job growth in the upcoming report, as August first-reported payroll growth was slower than it was in July in each of the last three years, possibly reflecting a seasonal bias in the first vintages of the data. We estimate the unemployment rate remained unchanged at 4.3%. The July unemployment rate barely rounded down (at 4.3497%), but we expect a moderate rise in household employment in excess of labor force growth. Finally, we expect average hourly earnings to increase 0.1% month over month and 2.5% year-over-year, reflecting negative calendar effects.
- 10:00 AM ISM manufacturing, August (GS 56.8, consensus 56.5, last 56.3): Manufacturing surveys were generally firmer in August, and we expect ISM manufacturing to increase 0.5pt to 56.8. The Empire State (+15.4pt to +25.2) and Kansas City Fed (+6pt to +16) surveys both strengthened, while the Richmond Fed survey was flat (+14) and the Philly Fed survey edged down (-0.6pt to +18.9). Overall, our manufacturing survey tracker—which is scaled to the ISM index—bounced back 1.4pt to 58.0 in August.
- 10:00 AM University of Michigan consumer sentiment, August final (GS 97.7, consensus 97.3, last 97.6): We expect the University of Michigan consumer sentiment index to edge up 0.1pt to 97.7 in the August final estimate, reflecting continued firming in higher frequency consumer surveys. The preliminary report’s measure of 5- to 10-year ahead inflation expectations fell one-tenth to 2.5% in the preliminary reading after rising to the top of its 12-month range in July.
- 10:00 AM Construction spending, July (GS +0.7%, consensus +0.5%, last -1.3%): We expect construction spending to strengthen 0.7% in July following a 1.3% decline in the June report, reflecting an expected rebound in single-family construction.
- 4:00 PM Total vehicle sales, August (GS 16.6mn, consensus 16.6mn, last 16.7mn): Domestic vehicle sales, August (GS 12.9, consensus 13.0mn, last 13.0mn)
Source: BofA, DB, Goldman