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Look forward at the November 4, 2019 week: Light data calendar leaves room for Fed policymakers’ comments

A look forward at the November 4 week offers little by way of data that will supersede the importance of the October Employment Situation from November 1. What may prove more compelling is comments from Fed officials.

The end of the communications blackout period late in the prior week means that there is likely to be a lot of comment out there, both from previously scheduled appearances and as the press seeks to round out what is known after the FOMC decision and its signal for a pause in interest rate cuts after the past three meetings. Given that St. Louis Fed’s James Bullard did not dissent in spite of it only being a 25 basis point cut – in the past he has preferred 50 basis points – it could be that FOMC participants are less divided on the correct path for monetary policy. If so, it should drastically lower expectations for another rate cut at the final meeting of 2019 on December 10-11.

Although it is not on the release calendar, if the normal pattern is followed, the FOMC received the October Senior Loan Officer Opinion Survey at the October 29-30 meeting. If so, it will probably be released to the public at 14:00 ET on Monday. It is likely to show that C&I loans were not in as much demand in spite of willingness to lend on the part of banks. Consumer loan demand may be stronger for home mortgages and perhaps for some types of installment credit as well with the purchase of motor vehicles.

Data on sales of motor vehicles for October will be released on Monday morning. It is quite possible that sales will feel the lack of inventory as GM factories were idled for over a month from mid-September to the third week of October. However, GM’s loss could be a gain for other vehicle manufacturers. If October does underperform relative to recent months, look for a rebound in November.

New orders for all factory goods for September at 10:00 ET on Monday will probably compound the 1.1% decline in durables orders already reported with a falling dollar value for nondurables that will be partly from declines in petroleum prices.  The anticipated surge in oil prices related to the attack on Saudi production was briefer and less than expected.

Numbers of international trade in goods and services for September at 8:30 ET on Tuesday will update the advance deficit on goods only and provide a look at the services surplus. The revised numbers will shape up expectations for the second estimate of third quarter GDP when that is released at 8:30 ET on Wednesday, November 27. Declines in goods exports were less severe than the drop in imports. It means that net exports are going to be less of a drag on growth. Also, the data on wholesale trade for September at 10:00 ET on Friday will update the advance number and suggest the contribution from the change in inventories for GDP.  It is not likely to turn much more positive as businesses are working to avoid excess stock on hand should there be a recession.

The ISM Non-Manufacturing Index for October at 10:00 ET on Tuesday feels like an afterthought in the wake of the Employment Situation. However, regional data has pointed to continued expansion, if on a declining trend. That should help alleviate some of the worries about a wider recession after the ISM Manufacturing Index remained in contraction for a third straight month.

The report on Job Openings and Labor Turnover (JOLTS) for September at 10:00 ET on Tuesday lags the Employment Situation by a month. It will probably confirm what was in the employment report with a picture of good levels of job openings, a steady pace of hiring, low numbers of layoffs, and near record numbers of workers voluntarily leaving one job for another.

Initial jobless claims for the week ended November 2 could get noisy with layoffs associated with the education workers strike in Chicago. While the UAW strike at GM was larger and is ultimately likely to be of longer duration, businesses tangential to motor vehicle factories were reluctant to lose skilled workers in a layoff. The impact was barely to be noticed in the data. However, I would not be surprised at a jump in layoffs for workers associated with the Chicago school district as these are mainly in services.

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