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Look forward to the March 4, 2019 week – lots of data on the labor market and housing

The Census Bureau and Bureau of Economic Analysis have released their respective updated calendars for data reports. It is going to be the end of April before all the data reports are back on schedule. In addition to the disrupted calendar, this is the time of year when much of the data receives its annual revisions. It is going to require close watching to ensure that the correct numbers are in place for the correct month, and on the right release date.

The coming week will be the last before the communications blackout period around the March 19-20 FOMC meeting goes into effect at midnight on Saturday, March 9. At this writing there are relatively few Fed policymakers on the speaking calendar in the March 4 week. However, we have already heard extensively from Chair Jerome Powell in his semiannual monetary policy testimony (February 26-27) and a speech on economic developments delivered February 28, Vice Chair Richard Clarida in a speech about the economic outlook and monetary on February 28, and Vice Chair for Supervision Randal Quarles in a speech on February 22 about the balance sheet. Unless there is a momentous exogenous event between now and the meeting, it would be astonishing to hear anything far off the consensus expressed by Powell, Clarida, and Quarles. To wit, the outlook for interest rate policy is patient and data-dependent at a time of elevated risks from uncertain domestic fiscal policies and slower global growth, that the labor market is strong and inflation tame, the FOMC is in the process of planning to end its program of balance sheet normalization in the latter half of 2019, future interest rate policy will be conducted with “abundant reserves” and administered short-term rates, and that now is a good time to review and explore the framework for conducting monetary policy.

Economic data in the March 4 week will largely highlight the labor market. In the Employment Situation at 8:30 ET on Friday, there is unlikely to be another surge in employment in February like the up 304,000 of January. Some hiring may have been delayed by the shutdown as some government contractors did not have the cash to pay existing workforces. That may not have changed much before the end of the survey reference period on February 16. However, the disruption should have only temporary impacts. Even if the total is modest, averaging it out with January would suggest that underlying conditions are still sound. The uptick in the unemployment rate to 4.0% in January may have been in part due to the government shutdown and affected workers will be able to report they are employed again. However, there are also marginalized workers who are returning to the labor force and some new entrants after December graduations.

The ADP National Employment Report for February at 8:15 ET on Wednesday is also not expected to match its reported 213,000 rise in private payrolls in January. There are hints that both the service and manufacturing sectors are not planning to hire quite as many workers in the present economy, in part because of a perceived lack of applicants who meet company needs.

The Challenger report on layoffs and hiring intentions for February at 7:30 ET on Thursday should see continued low levels of job cuts overall and may get another solid month for hiring plans as do-it-yourself stores staff up for spring.

Initial jobless claims for the week ended March 2 at 8:30 ET on Thursday is expected to move a bit lower from the 225,000 in the prior week. There is still some hangover from the shutdown in continuing claims and winter weather has added some noise to the data. Nonetheless, the level is still quite low in an historical context.

There are also reports pertaining to the housing market in the coming week. On Friday, housing starts and permits issued for January is set for 8:30 ET and will get a bit lost behind the employment numbers.  This is a rescheduled reporting date after the shutdown. Starts in January will probably be above the disappointing surprise of 1.078 million units (SAAR). Permits-issued should stay about on trend after the 1.326 million units in December.

Construction spending in December at 10:00 ET on Monday is another catch-up report. Spending on residential and commercial properties could be slow. Where there may be some increased spending is on home renovation and repairs continuing after the natural disasters a month or two earlier.

The data on sales of new single-family homes in December at 8:30 ET on Tuesday is another report delayed by the shutdown. More recent indicators related to the housing market suggest that a pickup can be expected by February due to lower mortgage interest rates, but December numbers will reflect only the start of the slide in rates before they could offer much incentive to homebuyers. On the other hand, stock of existing homes is limited and consumers in the market may look at newer units or units under construction.

Another relatively old report will be the International Trade in Goods and Services for December at 8:30 ET on Wednesday. It will fill in some of the assumed data for net exports in the combined advance and second estimate of GDP released on February 28.

On February 21, The Conference Board released its Leading Economic Index for January inclusive of annual revisions, but still had to estimate a few components for the most recent months due to the shutdown. They said they would make an interim release of the Leading Economic Index on Monday, March 4 after the data was available before its normal release later in March.

The ISM Non-Manufacturing Index for February at 10:00 ET on Tuesday is expected to recover some of the ground lost in the decline to 56.7 in January. It was only a 1.3 point decrease from the prior month, but it reflected a sharp drop in new orders that in retrospect was probably another ripple from the shutdown. Now that the government is reopened and contracts are getting paid and new agreements inked, it should move up again.

The Quarterly Service Sector report for the fourth quarter 2018 at 10:00 ET on Thursday should affirm the healthy condition of non-manufacturing late last year.

The revised nonfarm productivity and costs for the fourth quarter at 8:30 ET will include the pieces of data missing from the preliminary report when the only fresh data was related to manufacturing.





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