Weekly Indicator Outlook/Monday's Indicators
First, setting the tone for market performance as the week starts is a Shanghai stockmarket loss of no less than 6.7% on Monday, which has led Asian and European (but not British, as of 10.30 am EST–3.30 pm GMT) stocks lower.
Japanese Industrial production rose 1.9% in July, raising the string of consecutive rises to 5. But critical export growth is lacking, and the figures, viewed from a year-to-year perspective, remain quite depressed. The fact that production continues to grow robustly, while exports and imports decline, or, at best, level off throughout the region, makes me quite concerned that the much-remarked-upon post-Lehman inventory restocking will be seen to have overshot on the upside in the next few weeks. One can only hope that the fact that the swingeing declines have led to such meager advances, viewed from a yearly perspective, will keep inventory restocking aligned to a much-reduced capacity of consumers to buy, and businesses to invest.
In the US, the Chicago Purchasing Manager’s Index, which provides a snapshot of the bosses’ propensity to invest, rose to a post-Lehman high in August.
Later in the week, all eyes will be on Friday’s US employment reports. The nonfarm payroll figure is expected to be down by *only* 220,000 for August, a slight improvement on July’s 240,000 loss, but the unemployment rate is expected to climb a notch, back up to June’s 9.5%, as discouraged (and uncounted) workers re-enter (presumably encouraged by July’s downward movement in unemployment) still horrific labor markets.
But other gauges of employment are also due out: on Thursday, US weekly new and existing unemployment claims figure comes in, ehile Eurozone unemployment indicators are slated for tomorrow. Unemployment there is forecast to rise .1% to 9.5%, which would, if it–and the US projection–materialize represent another noteworthy development in the crisis, when European and American unemployment rates finally converge after decades of mainly large divergence. It’s a fool’s errand as to which side will come off looking better….
US revised productivity and unit labor costs are due on Wednesday. Both figures are expected to be trimmed from their spectacular heights (inversely for ULCs), but the story of workers lucky enough to have steady jobs being squeezed implacably by the boss to make up for lack of sales and revenues is expected to stick.
Finally, indications on the health of the all-important US service sector will be released Thursday. This sector has contracted since September of last year, albeit at a slowing rate. Improvement is key for the US outlook, because it has such a large service sector. Regarding housing, US July pending home sales is out tomorrow. US retailers will also report comparable stores-sales on Thursday, providing a look at the increasingly important back-to-school sales in the retaiing calendar, and of the state of the US consumer.
