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Look Forward: Week of January 7, 2019 highlights CPI, FOMC minutes

The partial federal government shutdown that went into effect December 22 is ongoing. At present economic data out of the Bureau of Labor Statistics and Federal Reserve are unaffected, but numbers from the Census Bureau are on hiatus. Reports that have been delayed so far are:

  • 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)

Delays have not affected any vital reporting of data as yet, but the longer the shutdown goes on, the more likely it is that something the market looks to for guidance on the economy will be unavailable as scheduled. Next week should see delays for:

  • Factory orders for November at 10:00 ET on Monday, January 7.
  • International trade in goods and services for November at 8:30 ET on Tuesday, January 8.
  • Wholesale trade for November at 10:00 ET on Thursday, January 10.

As soon as the government reopens, the Census Bureau will reset its release schedule. The longer the shutdown goes on, the more likely it will decide to simply skip playing catch up and release the numbers on the next scheduled date for the report.

The data calendar next week would be sparse even with the government numbers from Census.

The CPI for December on Friday at 8:30 ET could well see a second month in a row when energy prices restrain increases overall. Gasoline costs in particular have been on the decline and December continued the trend of week-to-week drops.

The NFIB Small Business Optimism Index is set for 6:00 ET on Tuesday. It held at record levels for some months in 2018, but the November report posted a fairly sharp decline to 104.8 from 107.4 in October and is 4 points below the recent peak of 108.8 in August. It would be premature to suggest that small businesses are experiencing collapse in confidence, but it could well be that the post-election ebullience is finally wearing down to something more in line with underlying moderate growth.

The ISM Non-Manufacturing Index for December is on Monday, at 10:00 ET. Regional surveys for the service sector have not been as consistently negative as those for manufacturing were, but on net point to a probable decline below the 60-mark in December from 60.7 in November which was the third month in a row of exceptionally strong readings. Like manufacturing, this remains to be seen if it is a one-month adjustment after a very busy year, or if it is getting ready to reset to a lower pace of expansion.

The data on Job Openings and Labor Turnover (JOLTS) for November at 10:00 ET on Tuesday should affirm that labor market conditions were tight in the month with plentiful job openings, a decent pace of hiring, relatively few layoffs, and workers voluntarily leaving jobs for new opportunities.

Initial jobless claims for the week ended January 5 is the first week in which holiday workers laid off will begin to file for benefits. Retail outlets and transportation companies may opt to keep on a portion of these people to fill outstanding open positions.

The minutes of the December 19-20 FOMC meeting will be released at 14:00 ET on Wednesday. The notes on policymakers’ discussions will be three weeks old by then, and to some extent overtaken by events such as continued declines in equity markets and the imposition of the partial government shutdown. Nonetheless, a review of how FOMC participants assess the risks to the economy will be of interest. The next FOMC meeting is not far away – January 30-31. There is no expectation of another rate hike so soon, but the minutes may shape expectations of just how long it will be.

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