3 Numbers To Watch: US Payrolls, Personal Income, Factory Orders
Saxo Bank | Aug 02, 2013 06:37AM ET
This busy week’s crowning moment will be today’s US employment report. Wednesday’s Federal Reserve statement and Thursday European Central Bank’s (ECB) press conference failed to shed new light: the Fed promised to adjust its policy based on incoming data and the ECB is in a holding pattern. This makes this afternoon's US data even more important as the Fed has a reaction function which the ECB lacks.
The Federal Reserve’s James Bullard speaks at 16:15 GMT. In the June meeting he cast a dissenting vote, being worried about low inflation. But in this week’s meeting he joined the consensus sentiment as low inflation was addressed in the Fed's statement. He will surely be asked to clarify today. Spain’s macroeconomic improvements have made headlines recently so the International Monetary Fund’s Article IV Staff Report at 14:00 GMT could be interesting.
US July Employment Report (12:30 GMT): Non-farm payrolls are expected to have risen by 183,000 in July, following a robust increase of 195,000 in June. The unemployment rate is expected to have decreased a bit to 7.5 from June’s 7.6 percent. After the strong readings in both consumer sentiment and the ISM manufacturing index for July, expectations have been building for a high number.
With consumer spending still relatively weak, many of the jobs that have been created are of “low-quality”: temporary, not full-time and low-wage jobs. I would also like to see the participation rate finally picking up — many have noted that the labour force has grown rapidly during the past months, meaning that even a good job growth rate has not led to a higher labour market participation rate.
A strong number would lead to a probable early tapering of the Fed’s asset purchase programmes, hiking yields and strengthening the USD. Technically, if the EURUSD breaks lower from the current levels there would be plenty of downside left.
US June Personal Income and Outlays (12:30 GMT): Personal income is expected to have risen by 0.5 percent in June — an unchanged growth rate from May. Personal consumption has been trending down for two years now, but the improving employment picture and the recent bounce in income and consumer sentiment could mean that spending is about to pick up. This would be very important for the economy. Spending has increased for couple of months now and a 0.5 percent increase is expected, higher than May’s 0.3 percent increase.
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