A look forward at December 2 week begins with CyberMonday. Online retailers and retailers who have an online component are going to be aggressive in offering promotions and building some momentum for the relatively short holiday shopping season in 2019 and this year they have co-opted Black Friday as well. Earlier promotions may sap some of the sales from the Monday event. However, on-line retailers can look forward to a larger share of sales, and brick-and-mortar stores will see more orders coming through their web presence whether shopper opt for delivery or in-store pickup.
See the Whetstone Analysis “On the radar: Holiday shopping period a short 27 days in 2019” from October 14, 2019.
See the Whetstone Analysis “First Cut: E-commerce share of retail continued to grow in 3Q 2019” from November 19, 2019.
The timing of the data calendar means that the end-of-month reports for November are out of the way and leaves plenty of space for the first-tier numbers to stand out during the week.
At the top of the stack is the November Employment Situation at 8:30 ET on Friday. The October payroll numbers were surprisingly solid even with the UAW strike reducing levels for the manufacturing sector. Those workers will be added back in for November, so the headline may look a little plumper than it might otherwise, but the underlying trend is expected to remain above the level Fed policymakers look for to absorb new workers entering the labor force. The unemployment rate is expected to hover around 3.6%.
The ADP National Employment Report for November at 8:15 ET on Wednesday will provide a hint as to the size and direction of the private payroll numbers. So far private payroll gains haven’t slacked off much in spite of slower economic activity. This may be in part due to shortages of skilled workers, so businesses are still hiring where they can find them.
Layoff activity usually starts to pick up in November as businesses cut costs and prepare for the coming year. The Challenger report for November at 7:30 ET on Thursday will signal if businesses are reluctant to do that even if activity has fallen off. It is expensive to bring on new staff and there is no guarantee that workers lost in the short-term can be replaced later with equally qualified people. However, hiring intentions may not be as busy with so much uncertainty about the outlook.
Initial jobless claims for the week ended November 30 at 8:30 ET on Thursday may also have something to say about whether businesses are cutting payrolls. It is also quite normal at this time of year to cut back on activity as the weather eliminates some outside work. However, construction and related work may continue as long as possible with strong demand for new housing. With manufacturing activity already powered down due to slower conditions, the usual wave of layoffs at factories may have already taken care of at least part of expected reductions in staffing.
The preliminary read on the University of Michigan Consumer Sentiment Index for December is at 10:00 ET on Friday. Its publication so early in the month means it may be more subject to revision when the final report is released on December 20. In any case, as long as the labor market is solid, consumers should remain optimistic about present conditions and hopeful about the near term. The index level through November suggests that consumers are focusing on the positives. Retailers are watching carefully to see if this translates into spending for the winter holidays.
Sales of new motor vehicles for November on Tuesday could see a slight rebound after the strike at GM cut into some sales. Aggressive holiday promotions and low interest rates may also encourage some buying over the long Thanksgiving weekend and may especially benefit the light trucks category of sales.
The ISM Manufacturing Index for November at 10:00 ET on Monday is anticipated to remain below the 50-mark for a fourth month in a row. Slow global growth and lack of demand for equipment domestically is going to keep new orders in check for the factory sector, which in turn means that production will be sluggish, businesses will be cautious about inventory sizes, goods will be moving along the pipeline without delays, and employment will be limited.
The ISM Non-Manufacturing Index for November at 10:00 ET on Wednesday could manage a slight increase. The service sector got a boost in October after closing of contracts at the start of the 2020 government fiscal year. Some of that activity may stretch into November.
New orders for all factory goods in October at 10:00 ET on Thursday will follow the lead of the advance data on durable goods combined with nondurable orders. The main driver on the nondurables side will be the slide in petroleum prices that should partially offset the increase 0.6% in durables.
Construction spending in October at 10:00 ET on Monday should reflect the weakness in commercial building with some offset from the solid conditions for residential real estate.
Fed policymakers will heed the communications blackout period that went into effect at midnight on Saturday, November 30 and runs through midnight on Thursday, December 12. Since expectations for no change in short-term rates is nearly universal, the lack of comments will not prove unsettling.
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