skip to Main Content

Look Forward: Week of December 31, 2018

At least for now, the partial shutdown of the federal government will have a minimal impact for the first-tier economic data. The Census Bureau’s reports are delayed, but those out of the Labor Department and Federal Reserve remain on track. This could change should the shutdown drag on. (See below for list of delayed reports.)

In any case, the December 31 week is not a particularly busy one given the timing of year-end around the holidays. Monday will see an early close for the bond market while stocks will have a full day. Otherwise, it is essentially part of a four-day weekend that stretches into Tuesday for New Year’s Day. Technically Wednesday will mark a return to work, but most of the economic data is packed into Thursday with only the employment numbers on Friday. Some reports will be off-pattern for release due to the holidays.

The ISM Manufacturing Index for December will be released on Thursday at 10:00 ET rather than Wednesday which is technically the first business day of the month. (The ISM Non-Manufacturing Index will be reported on Monday, January 7 at 10:00 ET, technically the fourth business day of the month rather than the normal third day.) While the national data for the factory sector does not necessarily follow the tone of the regional surveys, the available numbers suggest that activity may have hit a stumbling block in December. The headlines from the New York, Philadelphia, Richmond, and Kansas City Feds all point lower, some sharply. If the remaining general business conditions index in the Dallas Fed Texas Manufacturing Outlook at 10:30 ET on Monday also signals softening, it will cement the expectation that the ISM number will fall from the 59.3 in November and raise concerns this could be more than a one-month pause at the start of winter.

Data about conditions in the service sector will be thin. The Dallas Fed’s Texas Service Sector Outlook at 10:30 ET on Wednesday is the only remaining regional Fed survey for non-manufacturing. Data for December is mixed to-date, but overall indicates services are still on modest expansionary trend.

Motor vehicle sales for December will be reported as available on Thursday. The December sales period will include the New Year’s holiday as it typically does. It remains to be seen if dealer promotions combine with consumer optimism to boost sales in the last month of the year.

There is a fair amount of labor market data leading into the release of the Employment Situation for December on Friday at 8:30 ET. Despite some slower readings for activity in manufacturing and services, the subindexes related to employment and wages do not suggest that businesses are doing other than continuing to hire while being forced to offer better wages to attract and retain workers. The report will include the annual revisions to seasonally adjusted data in the household survey for the most recent five years. The revisions are not expected to alter the overall picture of low unemployment. (Establishment survey annual revisions will be released in February with the January data.)

The Challenger Report on layoff and hiring intentions in December at 7:30 ET on Thursday should reflect the normal pickup in layoffs at year-end. However, it may represent a decline from the more elevated levels of the September-November period when a few big layoff announcements dominated the numbers. Hiring should remain about on pace for modest gains outside of the big swings in the retail sector.

The ADP National Employment Report for December at 8:15 ET on Thursday (rather than the usual Wednesday) may continue to hint at a reduced pace of hiring for the private sector. If it does, it should not be a significant slowing and levels are not expected to fall below those consistent with the economy’s ability to absorb new workers.

Seasonal adjustment for initial jobless claims in the week ended December 29 at 8:30 ET on Thursday anticipate an upswing in filings for benefits. This may not be fully reflected in the current labor market where businesses are holding on to workers in expectation it may be hard to get back them if needed. Claims have been hovering in the low 200,000’s since mid-year outside of a few short-term bursts of noise. Given the strength of the labor market and the size of the seasonal adjustment factors, it is possible that claims could fall to fresh historic lows under the 200,000-mark for a week or two in early January.

Delayed reports:

  • Sales of new single-family homes for November (was Thursday, December 27 at 10:00 ET)
  • Advance international trade, retail inventories, wholesale inventories for November (was Friday, December 28 at 8:30 ET)
  • Construction spending for November (was Thursday, January 3 at 10:00 ET)
Back To Top