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Perspectives

Key US data releases and events

Published: 2/28/2014
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The February employment report is on tap for next week.



Fourth-quarter GDP was revised down 0.8 percentage point, to 2.4%. Consumer spending grew at a slower rate than initially reported, while businesses accumulated fewer inventories. On the other hand, business capital equipment investment was revised upwards. Final sales growth (GDP excluding volatile inventories) was revised down from 2.8% to 2.3%. This puts it slightly below the third quarter’s 2.5% growth rate. But the numbers suggest more stability than deterioration. Final sales growth has averaged 2.0–2.5% for most of the past few years. Once the fog of bad winter weather is lifted from the first quarter, we expect modest accelerations in final sales and GDP growth this year relative to 2013.

New home sales unexpectedly increased 9.6% in January to 468,000, a five-year high, despite bad weather. Inventories of new homes were flat, so the months’ supply fell to just 4.7. Pending sales of existing homes—which represent initial contract signings and presage final sales within one to two months—increased 0.1% in January, after falling for the previous six months. Hopefully this means that the housing market has reached a bottom in the wake of the run-up in mortgage rates. In other housing news, the S&P/Case-Shiller Home Price Index increased 0.8% (seasonally adjusted) during December, less than in previous months. Year-on-year home price gains softened to 13.4%, from 13.7%. Housing inventories remain tight relative to sales, but we expect price gains to moderate this year.

Next week brings February’s employment report. After two weak months, we anticipate a modest improvement in the pace of payroll employment growth, to 160,000 jobs. Initial claims numbers suggest that businesses let go of fewer workers this month, but the pace of hiring is uncertain given the weather. The unemployment rate likely inched up to 6.7% as more workers reentered the labor force. In other data news this coming week, consumer spending likely advanced just 0.1% in January, once adjusted for inflation. The ISM Manufacturing Index likely saw a token 0.7 point increase to 52.0 in February, while the ISM Non-Manufacturing Index likely declined 0.5 point to 53.5. The trade deficit is expected to have widened by $1.2 billion in January, to $39.9 billion, on a larger bill for imported oil. And motor vehicle sales should pick up to 15.5 million units (annual rate) in February, from 15.2 million in January, but still show some impact from bad weather.

Monday, 3 March – Personal income and consumption (Jan.)

Personal consumption, nominal

  • IHS: 0.2%
  • Consensus: 0.1%
  • Last actual: 0.4% (Dec.)

Personal consumption, real

  • IHS: 0.1%
  • Last actual: 0.2% (Dec.)

Personal income

  • IHS: 0.2%
  • Consensus: 0.2%
  • Last actual: 0.0% (Dec.)

Core PCE inflation

  • IHS: 0.1%
  • Consensus: 0.1%
  • Last actual: 0.1% (Dec.)

What to look for

  • Weak spending growth

Implications

Personal income, which was flat in December, likely grew 0.2% in January. Adjusted for inflation, spending likely advanced just 0.1% in January thanks in part to unfavorable weather. Core PCE inflation was likely just 1.1% in year-over-year terms.

Monday, 3 March – Construction spending (Jan.)

Construction put-in-place

  • IHS: -0.1%
  • Consensus: -0.3%
  • Last actual: 0.1% (Dec.)

Construction excl. residential improvements

  • IHS: -0.1%
  • Last actual: -0.3% (Dec.)

What to look for

  • Weather-related dip

Implications

Construction spending likely declined 0.1% in January. We expect that the value put-in-place ebbed due to inclement weather.

Monday, 3 March – ISM Manufacturing Index (Feb.)

  • IHS: 52.0
  • Consensus: 52.0
  • Last actual: 51.3 (Jan.)

What to look for

  • Token pickup in the index

Implications

The ISM Manufacturing Index likely crept up to 52.0 in February, from 51.3 in January. But the improvement is more of a token gain than a genuine acceleration in growth, since the January drop was just a return to more-normal growth following a late-2013 spurt.

Monday, 3 March – Motor vehicle sales (Feb.)

  • IHS: 15.5 Million
  • Consensus: 15.4 Million
  • Last actual: 15.2 Million (Jan.)

What to look for

  • Improvement after a terrible January

Implications

Motor vehicle sales likely increased to 15.5 million in February, a small improvement over the prior month but still dampened by weather.

Wednesday, 5 March – ISM Non-Manufacturing Index (Feb.)

  • IHS: 53.5
  • Consensus: 53.5
  • Last actual: 54.0 (Jan.)

What to look for

  • A slight decline in the index

Implications

The ISM Non-Manufacturing Index likely declined 0.5 point in February, to 53.5, conceding half of January’s gain.

Thursday, 6 March – Productivity (Q4, final)

Nonfarm business productivity:

  • IHS: 1.7%
  • Consensus: 2.6%
  • Last actual: 3.2% (Q4, preliminary)

Unit labor costs:

  • IHS: 0.0%
  • Consensus: -1.0%
  • Last actual: -1.6% (Q4, preliminary)

What to look for

  • Productivity lower, labor costs higher

Implications

Fourth-quarter labor productivity was likely revised below the initial estimate, to 1.7%, as nonfarm output is revised lower. Growth in unit labor costs was likely revised up to 0.0%.

Friday, 7 March – Trade balance (Jan.)

  • IHS: -$39.9 Billion
  • Consensus: -$39.0 Billion
  • Last actual: -$38.7 Billion (Dec.)

What to look for

  • Trade balance widens

Implications

The trade deficit likely widened by $1.2 billion in January, to $39.9 billion, on a larger bill for imported oil.

Friday, 7 March – Employment report (Feb.)

Nonfarm payrolls, change

  • IHS: 160,000
  • Consensus: 150,000
  • Last actual: 113,000 (Jan.)

Unemployment rate

  • IHS: 6.7%
  • Consensus: 6.6%
  • Last actual: 6.6% (Jan.)

Average hourly earnings

  • IHS: 0.1%
  • Consensus: 0.2%
  • Last actual: 0.2% (Jan)

What to look for

  • Better payroll growth, but still on the weak side

Implications

After two weak months, we anticipate a modest improvement in the pace of payroll employment growth in February, to 160,000 jobs. Initial claims numbers suggest that businesses let go fewer workers, but the pace of hiring is uncertain given the weather. The unemployment rate likely inched up to 6.7%.

by Paul Edelstein, Stephanie Karol, and Doug Handler

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