With summer vacation on Wall Street officially over, and with an eventful August behind us, there is plenty for markets to get excited about this week even with the US closed Monday for Labor Day.
The key events this week include payrolls on Friday but before that the final PMIs are out today through Wednesday. The big data highlight next week comes on Friday with the August employment report in the US. Expect hourly earnings data to once again be the main focus with the market currently expecting a +0.3% mom print which should be enough to push the annual rate up one-tenth to +2.8% yoy and back to the May highs. Nonfarm payrolls is expected to print at a solid 191k which as a reminder follows that softer than expected 157k reading in July. The unemployment rate is expected to hold at 3.9% and average weekly hours at 34.5 hours.
The other potentially interesting data in the US next week comes in the manufacturing sector with the final August PMI and ISM readings due on Tuesday. The latter is expected to fall around half a point to 57.6. Outside of that we’ll also get August vehicle sales data on Tuesday, the July trade balance on Wednesday, August ADP and ISM non-manufacturing on Thursday as well as final July durable and capital goods orders data.
Focusing on the US, the key economic data releases this week are the ISM manufacturing report on Tuesday, the ISM non-manufacturing report on Thursday, and the employment report on Friday. There are several scheduled speaking engagements by Fed officials this week, including a speech by New York Fed President Williams on Thursday.
As DB’s Craig Nicol writes, away from all that the final global August PMI revisions should be a focus for the market during the week too. Today we got manufacturing prints in Asia and Europe while on Wednesday we’ll get the remaining services and composite readings. The final Q2 GDP reading for the Eurozone is also due on Friday with no change from the +0.4% qoq first revision print currently expected.
Outside of the PMIs today, a highlight was the Turkish CPI, which printed at 17.9%, a fresh 15 year high. Meanwhile, Turkish and Argentinian headlines will be closely watched all week too.
Elsewhere the trade war could also come back under the spotlight with Thursday marking the deadline for the end of a public comment period on a plan for the US to impose tariffs on $200bn in Chinese imports. This would mean the US administration could impose tariffs as early as the back end of this week with news reports last week suggesting that could be the case.
Meanwhile Fedspeak starts to pick up next week. On Monday Chicago Fed President Charles Evans is due to take part in a panel on ‘Global Macroeconomic Perspectives’ at a Central Bank of Argentina event. Evans then speak again on Tuesday when he takes part in a roundtable discussion on ‘Dealing with Monetary Policy Normalization’. Minneapolis Fed President Neel Kashkari will then speak at a town hall forum in Montana on Wednesday while Atlanta Fed President Raphael Bostic and New York Fed President John Williams are also scheduled to make comments on the same day. Williams is then slated to speak on Thursday at a fireside chat in New York before we end the week on Friday with Boston Fed President Eric Rosengren due to speak at a conference on the ‘Long Term Consequences of Low Interest Rates’, Cleaveland Fed President Loretta Mester moderating a panel titled a ‘Reality Check from the Markets’ and finally Dallas Fed President Robert Kaplan taking part in a energy and economy conference in Dallas.
Other potentially interesting things to keep an eye on next week include German Chancellor Merkel speaking at a conference on Tuesday on Germany’s future as a financial centre, while her Economy and Energy Minister colleague Altmaier may discuss Europe and US relations, Brexit and China at a town hall event on the same day. Tuesday also marks the day that the full US Congress returns. There will also be some fireworks on Wednesday as executives from Twitter, Facebook and Google are due to testify to Congress on possible Russia election interference according to Deutsche Bank.
Below is a daily breakdown of key events, courtesy of Deutsche Bank
- Monday: Kicking off the week on Monday will be the release of the final August manufacturing PMIs in Japan (Nikkei), China (Caixin), the Eurozone and UK. Prior to that we’ll get Q2 capital spending and capital profits data in Japan, while August CPI data in Turkey is likely to be closely watched in light of recent events in the country. Away from that the Fed’s Evans will speak on a policy panel in Argentina and the ECB’s Mersch will make comments in Paris. Markets in the US will stay closed for the Labor Day holiday.
- Tuesday: Overnight on Tuesday we’ll get the August BRC like-for-like sales data in the UK. In Europe the only data of note is the July PPI report for the Eurozone while in the US the main focus will be on manufacturing data with the final August PMI and ISM due, as well as July construction spending data. Later in the evening we’ll also get August vehicle sales data, while the Fed’s Evans and BoE’s Carney are also scheduled to speak. Germany’s Chancellor Angela Merkel will also be speaking at a conference on Germany’s future as a financial center in Frankfurt while Germany’s Economy and Energy Minister Peter Altmaier may discuss Europe and US relations, Brexit and China at a town hall meeting. It’s worth noting that US Congress also returns on Tuesday.
- Wednesday: Wednesday is also set to be dominated by PMI releases with the final August services and composite prints due in Japan (Nikkei), China (Caixin), the Eurozone and UK. Also due out is July retail sales data for the Eurozone while in the US the July trade balance is due. The Fed’s Kashkari, Williams and Bostic are all due to speak during the day. It’s worth also noting that Twitter, Facebook and Google executives will testify before Congress on Wednesday concerning possible Russia election interference.
- Thursday: With no data of note in Asia on Thursday, the early focus will be on Germany where July factory orders data is due. It’s a lot busier in the US on Thursday with the August ADP employment change report, Q2 nonfarm productivity and unit labor costs, initial jobless claims, services and composite PMIs for August, ISM non-manufacturing for August, July factory orders and final July capital and durable goods orders data all due. Away from that the Fed’s Williams and BoJ’s Kataoka are also expected to speak during the day. Thursday also marks the deadline for the public comments period before the US administration potentially goes ahead with the next round of tariffs on China.
- Friday: The big highlight on Friday is the August employment report in the US. Prior to that though, we get July household spending and labor cash earnings data in Japan along with the preliminary July leading index. The main focus in Europe should be the final Q2 GDP print for the Eurozone, while July trade data in Germany and France and industrial production data in the former is also due. We will also be getting China’s August foreign reserves data at some stage during the day on Friday. Finally, the end of week is also a busy one for Fedspeak with Rosengren, Mester and Kaplan all due to speak.
Finally, focusing only on the US, here is Goldman with this week’s key events:
Monday, September 3
- Labor Day holiday. U.S. markets are closed, and there will be no major data releases.
Tuesday, September 4
- 09:45 AM Markit Flash US Manufacturing PMI, August final (consensus 54.5, last 54.5)
- 10:00 AM Construction spending, July (GS +0.3%, consensus +0.4%, last -1.1%): We expect construction spending to rebound 0.3% following a 1.1% decline in the June report that mostly reflected a decline in public construction.
- 10:00 AM ISM manufacturing, August (GS 58.1, consensus 57.6, last 58.1): Our manufacturing survey tracker – which is scaled to the ISM index – declined by 1.0pt to 59.0 following softer manufacturing surveys on net in July. But given a larger than expected decline in the ISM measure in the previous month and resilient sales growth and commentary at industrial firms, we expect the ISM manufacturing index to remain unchanged at 58.1.
Wednesday, September 5
- 08:30 AM Trade balance, July (GS -$50.0bn, consensus -$50.0bn, last -$46.3bn): We estimate the trade balance widened by $3.7bn in July, reflecting a similar widening in the goods trade deficit in the Advance Economic Indicators report last week.
- 04:00 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will speak at a town hall event in Bozeman, Montana. Audience Q&A is expected.
Thursday, September 6
- 08:15 AM ADP employment report, August (GS +205k, consensus +190k, last +219k): We expect a 205k gain in ADP payroll employment in August, reflecting a further improvement in initial jobless claims and generally solid employment surveys. While we believe the ADP employment report holds limited value for forecasting the BLS 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), Q2 final (GS +2.9%, consensus +2.9%, last +2.9%); Unit labor costs, Q2 final (GS -0.9%, consensus -0.9%, last -0.9%): We estimate nonfarm productivity will be unrevised at +2.9% (qoq ar), and we expect growth in Q2 unit labor costs – compensation per hour divided by output per hour – to remain at -0.9% (qoq saar).
- 08:30 AM Initial jobless claims, week ended September 1 (GS 210k, consensus 213k, last 213k); Continuing jobless claims, week ended August 25 (consensus 1,718k, last 1,708k): We estimate that initial jobless claims declined to 210k in the week ended September 1. Initial jobless claims continue to decline steadily, and we believe there is scope for this trend to continue.
- 09:45 AM Markit Flash US services PMI, August final (consensus 55.2, last 55.2)
- 10:00 AM ISM non-manufacturing, August (GS 57.5, consensus 56.6, last 55.7): We expect the ISM non-manufacturing index to rebound 1.8pt to 57.5 in the August report. On net, our nonmanufacturing survey tracker moved up 0.8pt to 58.7, reflecting a strengthening of service-sector surveys. New highs in US equities may also boost sentiment among survey respondents.
- 10:00 AM Factory orders, July (GS -0.4%, consensus -0.6%, last +0.7%); Durable goods orders, July final (last -1.7%); Durable goods orders ex-transportation, July final (last +0.2%); Core capital goods orders, July final (last +1.4%); Core capital goods shipments, July final (last +0.9%): We estimate factory orders declined 0.4% in July following a 0.7% increase in June. Durable goods orders declined in the July advance report, largely driven by a decline in transportation equipment. However, core measures were solid, with increases in both core capital goods orders and shipments.
- 10:00AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will hold a fireside chat on the regional and national economy in Buffalo, New York. Audience Q&A is expected.
Friday, September 7
- 08:30 AM Nonfarm payroll employment, August (GS +175k, consensus +193k, last +157k); Private payroll employment, August (GS +170k, consensus +194k, last +170k); Average hourly earnings (mom), August (GS +0.2%, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), August (GS +2.7%, consensus +2.7%, last +2.7%); Unemployment rate, August (GS 3.8%, consensus 3.8%, last 3.9%): We estimate nonfarm payrolls increased 175k in August. Our forecast reflects a drag of 40k or more from negative residual seasonality in August, but we believe the underlying trend remains firm given solid employment surveys and jobless claims data. We also note a possible drag in the August report from uncertainty following the imposition of July tariffs. We expect the unemployment rate to fall one tenth to 3.8%, reflecting the further decline in continuing claims over the payroll month. Finally, we expect average hourly earnings to increase 0.2% month over month and 2.7% year over year, reflecting neutral calendar effects.
- 08:30 AM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Fed President Eric Rosengren will give opening remarks at a conference on the consequences of long periods of low interest rates at the Boston Fed.
- 09:00 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will moderate a panel titled ‘Reality Check from the Markets’ at the Boston Fed.
- 12:45 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Fed President Robert Kaplan will take part in a Q&A session in Dallas during a conference on energy and the economy hosted by the Federal Reserve Banks of Dallas and Kansas City.
Source: DB, BofA, Goldman
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