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Look forward at November 25, 2019 week: Holiday shortened week has a lot to digest before Thanksgiving dinner arrives

A look forward at the November 25 week includes an eye-popping number of economic releases packed into Tuesday and Wednesday. With the federal holiday on Thursday and Black Friday effectively a holiday as well, sources of data are trying to get the remainder of November’s scheduled releases out before close of business on Wednesday. Thursday is a full market holiday for stocks and bonds and Friday has an early close for both markets.

It is going to be a struggle to sort through the barrage of reports that close out the month. However, a breakdown suggests that only a few standouts are going to need more than cursory initial attention. Most can wait for fuller examination when things quiet down. It will also be necessary to be alert to small alterations in the release days and times in order to accommodate the holiday.

The second estimate of third quarter GDP at 8:30 ET on Wednesday will probably get some revision to the up 1.9% in the advance estimate. If there are signs of weaker consumer spending than initially thought, it will cast the third quarter in a less positive light, especially if business investment is revised down as well from already low levels. It doesn’t look like the small drag from net exports will be much different than first reported, or that the change in inventories offer any support. Residential housing has been chugging along well, so there may be some upward revision in terms of investment there.

Personal income and spending for October is set for 10:00 ET on Wednesday. (Normally this data is at 8:30 ET the day after the GDP numbers.)  Gains in wages and salaries were flat in September but could resume their mild upward pace in October. Personal consumption as generally be increasing steadily – if modestly – month-to-month and an uptick in gasoline prices should help keep the rise on track. The PCE deflator is not expected to signal any real change of momentum for October. The core CPI was actually down a tenth year-over-year at 2.3% in October and the core Final Demand PPI was down two-tenths to 1.5% from October 2018. For a long time it has been services driving what upward pressure there is in prices. These seem to have begun to plateau or even decline a bit. The PCE deflator could take a similar turn for October.

Initial jobless claims for the week ended November 23 will be reported at 8:30 ET on Wednesday. (This is one day sooner than normal due to the holiday on Thursday.)  The early release preparation may mean that some states will estimate claims. There may also be noise from the cold snap that hit large parts of the US as from wildfires in the West. The end of the 15-day Chicago teachers strike as of November 1 should mean that any rise in continuing claims in the November 16 week will start to decline.

Also on Wednesday at 8:30 ET is the advance report on durable goods orders for October. The transportation component is probably going to make this another dismal report. New orders for motor vehicles may have started to recover after the end of the strike at GM. However, that came late in the month and won’t make up for lack of orders in the prior weeks. Boeing reported only 10 new orders for October which was a decline of 15 from the prior month. Aircraft orders are better from defense than from commercial. Neither are doing particularly well with the ongoing fallout from the 737 MAX air disasters. This is also continuing to eat away at unfilled orders with cancellations still rising.

The durables orders report will be preceded by the last of the regional surveys of manufacturing for November. The Dallas Fed’s Texas Manufacturing Outlook is at 10:30 ET on Monday and the Richmond Fed’s Survey of Manufacturing is at 10:00 ET on Tuesday. The data from New York, Philadelphia, and Kansas City have already pointed to ongoing soft conditions. These are expected to follow suit. Of late the Richmond Composite Manufacturing Index has been seesawing between positive and negative readings. If the pattern holds, this index will fall back into contractionary territory after 8 in October. The Dallas Fed’s activity index has been on a downtrend for the prior two months and fell below neutral to -5.1 in October. This may regain some ground but will likely remain in contraction for November.

The November surveys for the service sector will be on Tuesday with the Philadelphia Non-Manufacturing Index at 8:30 ET, the Richmond Fed’s Service Sector Survey at 10:00 ET, and the Dallas Fed’s Texas Service Sector Outlook at 10:30 ET. Services in some regions got a nice bounce upward in October at the start of the 2020 fiscal year and with new government contracts. However, without a fresh influx of business, that probably will fade. In particular, the Philadelphia index is expected to decline from the 12.6 of October and the Richmond revenues index will lose much of the 18 point increase to 24 in October. The Dallas activity index slipped to 1.8 in October and is on the verge of dipping into contraction.

The MNI-ISM Chicago Business Barometer for November is scheduled for 9:45 ET on Friday. It will probably receive scant attention due to the unofficial holiday and much more news focus on the first shopping day after Thanksgiving as a bellwether of retail at the end of the year.

The last of the monthly reports for the housing sector should be in line with earlier data. Sales of new single-family homes for October at 10:00 ET on Tuesday is anticipated to reflect that consumers are turning to new construction where existing home stock is not available and that low mortgage rates now mean they are willing to sign up for units not yet built. The NAR’s Pending Home Sales Index for October at 10:00 ET on Wednesday is anticipated to back down a bit from the strong reading in September but should continue to signal solid levels of contracts signed to be closed in the next month or two. The FHFA House Price Index for September at 9:00 ET on Tuesday should tell a similar story to recent months that home sellers are seeing price increases but not hefty ones.

The Conference Board’s Consumer Confidence Index for November at 10:00 ET on Tuesday will have a hard time standing out against the other reports at the same time. It is expected to remain in line with recent months and consumers’ overall positive perceptions of labor market conditions and the outlook for business.

The Fed’s Beige Book at 14:00 ET on Wednesday is not going to garner a lot of immediate attention. By that time many offices will have cleared out in advance of the holiday. However, its content will keep until there is time to review it. This is the final report for 2019 and will cover from early October through mid-November. The last few editions of the Beige Book have pointed to deterioration in growth and more uncertainty about the economic outlook across the 12 Districts. The Beige Book is not hard data. However, its anecdotal evidence about growth – or lack thereof – is a good coincident indicator for the US economy. I think that the next edition will show that conditions have stabilized with weak manufacturing and less vigorous service sector activity. Any signal of a nearby threat of recession should be quieter.




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