Key U.S. Data Releases and Events

While ISM/NAPM leading indicators may offer some glimmers of hope that a bottoming process is starting, the employment report at the end of the week—with another 750,000 jobs expected to be lost—will be a sobering reminder of how much pain this recession is generating, although employment conditions are a lagging indicator on the economy. In other potentially sour notes, construction spending is expected to be down sharply in February, and motor vehicle sales for March should total around 9 million units (annual rate), as leasing and rental fleet demand remains collapsed and households continue to be broad-sided by plunging employment levels.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, March 31 – Conference Board Consumer Confidence (Mar.)

• IHS Global Insight: 23.0
• Consensus: 27.3
• Last Actual: 25.0 (Feb.)

What to Look For

• The index is expected to remain near the record low reached in February.

Implications

Any lift from the March stock market rally will be offset by the downdraft from a rapidly deteriorating job market. This index is more heavily affected by employment conditions than the Reuters/University of Michigan's consumer sentiment index, and we estimate that 750,000 payroll jobs were lost in March. After declining at a 4.3% annual rate in the fourth quarter of 2008, real consumer spending stabilized in early 2009. But recovery is not expected until summer.

Wednesday, April 1 – Construction Spending (Feb.)

Construction Put in Place

• IHS Global Insight: -2.5%
• Consensus: -1.7%
• Last Actual: -3.3% (Jan.)

Construction Excl. Residential Improvements

• Global Insight: -2.9%
• Last Actual: -4.3% (Jan.)

What to Look For

• Another sharp monthly drop in overall construction spending.

Implications

Single-family construction likely dropped 8–9%, despite February's small increase in single-family housing starts. Nonresidential construction is starting to post outsized percentage losses, and we are expecting a 3% drop in this category. Public construction tumbled 2.3% in January, and we are expecting a similar drop in February. Overall, we expect that construction spending fell 2.5% last month; excluding residential improvements, the drop was 2.9%.

Wednesday, April 1 – ISM Manufacturing Index (Mar.)

• IHS Global Insight: 34.6
• Consensus: 36.0
• Last Actual: 35.8 (Feb.)

What to Look For

• The overall index likely edged down a shade.

Implications

The ISM-manufacturing probably fell back to 34.6. That would still be above the December reading, but any reading near that level would still paint a very bleak picture for the near-term economy. Regional surveys have given mixed signals, with New York and Philadelphia very poor, but Richmond showing a substantial improvement.

Wednesday, April 1 – Motor Vehicle Sales (Mar.)

• IHS Global Insight: 9.0 Mil.
• Consensus: 9.2 Mil.
• Last Actual: 9.1 Mil. (Feb.)

What to Look For

• Auto sales to barely chin the bar to stay unchanged, at 9.0 million units (annual rate).

Implications

The retrenching consumer and lower levels of sales to fleet (especially daily rental) outlets will persist through the next few months. The industry eagerly awaits a decision from the Presidential Task Force on Autos in regards to the future of GM and Chrysler LLC—although it will take more than a bailout to reverse the historically low monthly sales results.

Friday, April 3 – Employment Report (Mar.)

Nonfarm Payrolls

• IHS Global Insight: -750,000
• Consensus: -660,000
• Last Actual: -651,000 (Feb.)

Unemployment Rate

• IHS Global Insight: 8.6%
• Consensus: 8.5%
• Last Actual: 8.1% (Feb.)

Average Hourly Earnings

• IHS Global Insight: +0.2%
• Consensus: +0.2%
• Last Actual: +0.2% (Feb.)

What to Look for

• Another sharp drop in payroll employment, near 750,000.
• Unemployment rate to jump to 8.6%.

Implications

There may be some hints of stabilization in consumer spending and the housing market, but we do not expect these to translate quickly into an improvement in the jobs market. The March employment report is expected to be another bleak one, with nonfarm payrolls dropping 750,000, their worst decline yet in this recession. A continuing uptrend in initial unemployment insurance claims and a sharp increase in continuing unemployment insurance claims during March are the main reasons for the pessimism. We expect to see the unemployment rate rising sharply, from 8.1% to 8.6%.

Friday, April 3 – ISM Nonmanufacturing Index (Mar.)

• IHS Global Insight: 41.0
• Consensus: 42.0
• Last Actual: 41.6 (Feb.)

What to Look For

• We expect a slight decline of just under one point.

Implications

The ISM index for services is expected to drop about one point in March, to 41.0. Freight activity continues to come under downward pressure, as both exports and imports have declined sharply and inventory reductions continue. Partially offsetting this, we may see an unusual seasonal pop in orders.