It’s All About This Friday’s Payrolls: Key Events In The Coming Week

After Friday’s Jackson Hole repricing of Fed hike expectations, which made it clear that the fate of a September (and perhaps December) rate hike is now in the hands of the August payrolls number, the main risk event of the week is therefore this Friday’s US NFPs for which consensus expects a reading of 180K, down from last month’s 217K print, leaving 3m trend at 242K. A number substantially above this will make a September hike virtually certain, and potentially risks roiling markets as good news will likely be bad news this time around.

Aside from payrolls, the key economic releases this week are PCE inflation on Monday, and ISM manufacturing on Thursday. There are several scheduled speaking engagements from Fed officials this week.

In the Eurozone, the main data releases include inflation, unemployment rate and a set of possible revisions of PMIs.

In the UK, the main release is manufacturing PMI, where a 49.5 reading is expected.

In Australia, the main releases include capex, retail sales and building approvals.

In Japan the main releases are jobless rate, retail sales and industrial production. The announcement of BoJ’s purchases of JGBs on Wednesday should garner attention.

In Canada, the main data release is Q2 GDP.

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It’s a quiet start to the week in Europe this morning with Italy confidence indicators the only data due out and markets in the UK shut for a bank holiday. In the US we already saw the July personal income and spending reports, both of which printed as expected, along with the PCE core and deflator readings. Later on we’ll also get the Dallas Fed’s manufacturing survey.

We kick off in Japan on Tuesday where we’ll get the latest jobless rate reading along with retail sales data. In Europe we’ll then get UK money and credit aggregates data, Euro area confidence indicators and Germany CPI for August. In the US tomorrow we’ll get the S&P/Case-Shiller house price index and also the August consumer confidence reading.

Turning to Wednesday, the early data in Asia comes in the form of Japan industrial production, housing starts and construction spending, and also China consumer sentiment prints. The UK will also report its August consumer confidence reading. During the European session on Wednesday we’ll get France CPI/PPI and consumer spending data, Germany unemployment and finally Euro area CPI for August. During the US session on Wednesday we’ll firstly get the ADP employment change print for August which will be worth keeping an eye on ahead of payrolls, as well as the Chicago PMI for this month and July pending home sales data.

It’s another busy day on Thursday and we start in the Asia session with the official and non-official August PMI’s in China. We’ll then get the final August manufacturing PMI revisions in Europe as well as a first look for those in the UK and also the periphery. We then get a number of reports in the US on Thursday including initial jobless claims, Q2 nonfarm productivity and unit labour costs, the final manufacturing PMI, ISM manufacturing and prices paid for August and finally vehicles sales data for August.

With little to highlight in the Asia and Europe sessions on Friday, as noted above the highlight will be the August employment report in the US and specifically payrolls. Also due out will be the July trade balance, ISM NY, factory orders and final revisions to durable and capital goods orders.

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A tabular summary of global key events and expectations from BofA:

Finally, a focus on just the U, courtesy of Goldman:


  • 8:30 AM Personal income, July (GS +0.5%, consensus +0.4%, last +0.2%); Personal spending, July (GS +0.4%, consensus +0.3%, last +0.4%); PCE price index, July (GS +0.03%, consensus flat, last +0.1%); Core PCE price index, July (GS +0.11%, consensus +0.10, last +0.10%); PCE price index (yoy), July (GS +0.8%, consensus +0.8%, last +0.9%); Core PCE price index (yoy), July (GS +1.6%, consensus +1.5%, last +1.6%): We expect personal income to rise by 0.5% and personal spending to rise by 0.4% in July. We also expect core PCE prices to increase by 0.11% in July after core CPI increased by a moderate 0.09%. The core PCE price index likely rose by 1.6% over the past year.
  • 10:30 AM Dallas Fed manufacturing index, August (consensus -3.0, last -1.3

Tuesday, August 30

  • 09:00 AM S&P/Case-Shiller home price index, June (GS -0.1%, consensus -0.1%, last -0.1%): The Case-Shiller home price index appears to have been influenced by seasonal adjustment challenges recently. We expect a 0.1% decline in house prices in June report based on the pattern seen last year. Over the past year, the 20-city index has increased by 5.2%.
  • 10:00 AM Conference Board consumer confidence, August (GS 98.0, consensus 97.0, last 97.3): Consumer confidence is likely to tick up to 98.0 in August after the index edged down in July. The index remains near the middle of its range over the last year. Indicators of consumer sentiment remain mixed; University of Michigan’s Consumer Sentiment report was softer, but Bloomberg’s Consumer Comfort index was more upbeat.

Wednesday, August 31

  • 03:15 AM Fed Presidents Rosengren and Evans speak: Federal Reserve Bank of Boston President Eric Rosengren (FOMC voter) and Federal Reserve Bank of Chicago President Charles Evans (FOMC non-voter) will participate in a panel hosted by the Shanghai Advanced Institute of Finance in Beijing. The topic of the panel is “Business Cycles, Financial Markets and Monetary Policy with Special Application to China.”
  • 08:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Federal Reserve Bank of Minneapolis President Neel Kashkari will give a speech on the role of the Fed and the bank’s board of directors in Saint Paul, Minnesota.
  • 08:15 AM ADP employment report, August (GS +185k, consensus +175k, last +179k): Based on our understanding of how ADP filters its own proprietary data with other publicly available information, we expect a 185k gain in ADP payroll employment in August.
  • 09:45 AM Chicago PMI, August (GS 54.0, consensus 54.0, last 55.8): We expect the Chicago PMI to decrease to 54.0 from 55.8, still above the breakeven level.
  • 10:00 AM Pending home sales, July (consensus +0.8%, last +0.2%): Consensus expects a modest gain in pending home sales in July, following a 0.2% increase in June. We have found pending home sales—based on contract signings rather than closings—to be a decent leading indicator of existing home sales with a one- to two-month lag.

Thursday, September 1

  • 08:30 AM Nonfarm productivity, Q2 final (GS -0.8%, consensus -0.5%, last -0.5%); Unit labor costs (qoq), Q2 final (GS +4.0%, consensus +2.0%, last +2.0%): We expect unit labor costs for Q2 to be revised up to 4.0% (qoq ar) from 2.0%, reflecting upward revisions to aggregate employee compensation and downward revisions to output in the second release of Q2 GDP.
  • 08:30 AM Initial jobless claims, week ended August 27 (GS 255k, consensus 265k, last 261k); Continuing jobless claims, week ended August 20 (last 2,145k): We expect initial jobless claims to edge down to 255k after decreasing by a bit more than expected last week. The largest increase was in Louisiana, which potentially reflected the flooding along the Gulf coast.
  • 09:45 AM Markit manufacturing PMI, August final (consensus 52.0, preliminary 52.1): Consensus expects the Markit services survey to be roughly in line with its flash estimate. Most responses to the survey are received by the time of the preliminary release, and revisions in the final release tend to be fairly minor.
  • 10:00 AM Construction spending, July (GS +0.3%, consensus +0.6%, last -0.6%): We expect construction spending to increase modestly after a -0.6% decline in June.
  • 10:00 AM ISM manufacturing, August (GS 51.5, consensus 52.0, last 52.6): Manufacturing surveys were mostly weaker in August, and we expect ISM manufacturing to soften to 51.5. The Richmond Fed survey contracted (-21pt to -11), and while the Empire State survey (-4.8pt to -4.3) weakened, key underlying components improved. The Kansas City Fed survey improved (+2pt to -4), but still remains in negative territory. The Philly Fed survey improved in August (+4.9pt to +2.0), but details of the report weakened notably. On net, our manufacturing survey tracker—which is scaled to the ISM index—decreased to 49.7.
  • 12:25 PM Cleveland Fed President Mester (FOMC voter) speaks: Federal Reserve Bank of Cleveland President Loretta Mester will give a speech on community development in Lexington, Kentucky. Audience and media Q&A is expected.
  • 4:00 PM Total vehicle sales, August (consensus 17.3mn, last 17.8mn): Domestic vehicle sales, August (consensus 13.5mn, last 13.8mn)

Friday, September 2

  • 8:30 AM Nonfarm payroll employment, August (GS +165k, consensus +185k, last +255k); Private payroll employment, August (GS +155k, consensus +180k, last +217k); Average hourly earnings (mom), August (GS flat, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), August (GS +2.3%, consensus +2.5%, last +2.6%); Unemployment rate, August (GS 4.8%, consensus 4.8%, last 4.9 %): We expect an August payroll gain of 165k, after a 255k increase in July. Our below-consensus forecast partly reflects a tendency for first-print August payrolls to be weak on average. The unemployment rate is likely to edge down one-tenth to 4.8%. We expect average hourly earnings to be flat month over month and decline to 2.3% year over year, largely due to calendar effects rather than any fundamental slowing in wage growth.
  • 08:30 AM Trade balance, July (GS -$41.8bn, consensus -$43.0bn, last -$44.5bn): We expect the trade balance to narrow in July. The Census Bureau’s new Advance Economic Indicators report showed that inventory accumulation was less than previously assumed, while the advanced goods trade balance showed a smaller-than-anticipated goods deficit. Overall, we expect the total trade deficit to be -$41.8bn.
  • 10:00 AM Factory orders, July (GS +1.9%, consensus +2.0%, last -1.5%): Factory orders likely increased in July, following better-than-expected data on durable goods orders.
  • 01:00 PM Richmond Fed President Lacker (FOMC non-voter) speaks: Federal Reserve Bank of Richmond President Jeffrey Lacker will give a speech titled, “Interest Rate Benchmarks” to the Virginia Association of Economists and the Richmond Association for Business Economics at the Richmond Fed.

A handy summary:

Source: DB, BofA, Goldman Sachs

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