A look forward to the June 29 week needs to keep an eye on the calendar of economic data. There are a number of shifts in the timing of releases due to the upcoming Independence Day observance. With July 4 falling on a Saturday in 2020, that means that Friday, July 3 is a day off. The Friday holiday means that there will be a full close of the bond and stock markets that day. Thursday will see an early close of the bond market while the stock market is open a full day.
Employment Friday is going to be Employment Thursday. The June Employment Situation will be released at 8:30 ET on Thursday. Anticipation of big gains for nonfarm payrolls in June – especially the hard-hit hospitality industry – is solid. However, another month of job adds in the millions should not mask that it is only a fraction of those lost due to the COVID-19 pandemic. Many of those jobs returned only because of government assistance in the form of the Paycheck Protection Program (PPP). When those funds run out many of those jobs could disappear again. The necessity to pull back from some reopenings of businesses in the wake of an increase in the count of COVID-19 cases may also lead to yet more layoffs, claims for which continued to be filed in alarming numbers. Until then, another decline in the unemployment rate will be welcome, but the level will be nothing to brag about. The best that can probably be said is that fiscal and monetary policy efforts to mitigate the harm to the labor market have had a positive effect.
Also of note is that initial jobless claims for the week ended June 27 will be reported at 8:30 ET on Wednesday, not Thursday. Applications for benefits continue to ebb without changing the underlying problem that these are still extremely high in the historical context. It is possible that the level could dip below 1 million in the week, although that could be a brief respite as noted above.
And while the release of the ADP National Employment Report for June will be at 8:15 ET on Wednesday and follow the usual pattern, the June Challenger report on layoff intentions will be on Wednesday at 7:30 ET, not Thursday as is normal. The ADP data should anticipate the return of millions of workers to private payrolls as some are recalled when businesses are able to reopen and/or some got a reprieve from employers getting PPP funds. The Challenger numbers will be of interest to see if plans for layoffs in coming months have settled into a particular industry and where hiring plans are starting to focus as businesses adapt to the necessities of operating in the pandemic environment.
The release of the minutes of the June 9-10 FOMC meeting at 14:00 ET on Wednesday will by-and-large be a non-event. Chair Jerome Powell’s semiannual monetary policy testimony on June 16-17 and the availability of the Fed’s Report to Congress have pretty much said all that the minutes have to say about the outlook for monetary policy with plans to keep interest rates low for a long time, asset purchases and forward guidance that support that view, and conduct of the facilities to ensure smooth market operations and get credit where it is most needed.
The ISM Manufacturing Index for June at 10:00 ET on Wednesday will offer a more positive take on conditions in the factory sector as some activity ramps up again. Four of the five District Bank surveys of manufacturing in June are available and all four point to greatly improved conditions. It suggests that the ISM index could leap from the soft 43.1 in May back to something nominally within expansionary territory. However, it is too soon to pronounce it a recovery for the factory sector.
The last of the District Bank surveys of manufacturing is the Dallas Fed’s Texas Manufacturing Outlook at 10:30 ET on Monday. Its general business conditions index is expected to show renewed activity in June and should support what the other Districts’ reports had to say about the factory sector.
The numbers on orders for all factory goods in May are going to look strong relative to two weak months in March and April. However, this is due to a rebound after two months of shutdowns at many factories where some orders accumulated. New orders for durable goods were up 15.8% in May from April. A revival in transportation orders helped boost the total. Nondurables will be up along with higher prices for petroleum after oil prices started to recover a bit and other goods like foods where scarcity is driving up costs.
The ISM Non-Manufacturing Index for June will not be released until Tuesday, July 7 at 10:00 ET. The four District Bank surveys for the service sector that have been reported to-date were all consistent with greatly improved conditions for services these remain in contraction. The Dallas Fed’s Texas Service Sector Outlook at 10:30 ET on Tuesday should line up with these as well.
The NAR’s Pending Home Sales Index for May at 10:00 ET on Monday is expected to get a boost after the fall to a series low of 69.0 in April. Easing of restrictions on public interactions and aggressive efforts to find ways to show homes during the COVID-19 pandemic have yielded greater sales activity along with motivation to capture mortgage rates while at or near historic lows. While recession and high unemployment are working against some homebuyers, increased housing stock among existing units and better affordability are keeping qualified buyers in the market.
Relief about labor market conditions will help bring the Conference Board’s Consumer Confidence Index for June at 10:00 ET on Tuesday should be a little above recent lows of 86.6 in May and 85.7 in April. Overall confidence is still buffeted by unknowns regarding the economic outlook and the course of the COVID-19 pandemic. The index should remain consistent with recessionary conditions.
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