After a spate of economic data last week, which included a better-than-expected jobs report, the economic calendar is much thinner this week. Normally on a light data week, traders will look to lesser reports that are typically not considered “market moving,” but there is even a dearth of those types of reports until the Treasury budget Wednesday afternoon.
On that point, Wall Street will look to glean some information about the next move by the Federal Reserve with respect to further tapering its monthly asset purchases as Philadelphia Fed President Charles Plosser and Chicago Fed President Charles Evans are scheduled to speak at separate events on Monday.
Beyond that, here’s what the markets will be looking at the rest of the week:
Initial Jobless Claims for the Week Ended March 8 – Last week, the Labor Department surprised by saying that new claims for jobless benefits, a rough gauge of weekly layoffs, dropped by 26,000 to a three-month low at 323,000 for the week ended March 1. The four-week moving average, a less volatile measure of labor trends, declined by 2,000 to 336,500. Icy and snowy conditions this winter have wreaked havoc with economic data, including reports on the labor market, in recent months, so the claims data returning to more normal levels is viewed as an optimistic sign that the slowdown so far in 2014 is indeed weather related. Adding some support to that conclusion was a nonfarms payroll report on Friday that showed the US added 175,000 new jobs in February and 25,000 more jobs in December and January that originally estimated.
For this week’s new claims report, economists are expecting are rise back up to about 331,000.
Retail Sales for February – Softness in retail sales has also been blamed on inclement weather conditions and uneven labor activity recently. For January, the Commerce Department said that headline retail sales declined by 0.4 percent, following a 0.1-percent contraction in December. January’s decrease was the worst performance since June. People spent more at the pump, with gas station sales rising 1.1 percent, but spent less time at car dealerships, with sales falling 2.1 percent in January (in December -1.8%). Excluding autos, retail sales were flat in January.
Economists are expecting a better month in February, predicting the headline retail sales figure to show an increase of 0.2 percent and the ex-autos number to also show expansion of 0.2 percent.
To a lesser extent, the markets will also look to a report on business inventories for January from the Commerce Department. Investors pay attention to this report because inventories can give a signal as to the health of the economy, plus retail inventories, excluding autos, are a component of calculating gross domestic product.
Producer Price Index for Final Demand for February – The government has revamped the Producer Price Index (previously called the PPI for finished goods), with January the first data from the new formulation that now includes services and construction, instead of solely tracking the price of goods before they reach consumers. The launch of the new format was necessarily brand new; the government has been publishing the figures on an experimental basis for four years.
The Labor Department showed in the report that the cost of producing goods and services increased by 0.2 percent in January, following a 0.1-percent rise in December. Most of the increase was attributed to the index for finished goods (+0.4%), as the index for final services eked up 0.1 percent. Year-over-year, producer prices were up 1.2 percent, representing the largest increase since October (+1.2%), but still well below the Fed’s 2.0 inflation target. So-called “core” PPI used to be calculated excluding the volatile food and energy categories, but the new method has opened the term to debate. This measure was up 0.2 percent in January after a flat December.
Some now consider core PPI to be broader, meaning that it is final demand, excluding food, energy and trade services. This measure, which likely will become the new “core” standard, increased 0.1 percent in January, following a 0.3-percent increase in December. For February, economists are the headline PPI for final demand figure to rise 0.2 percent. If you’re checking out the “core” figure, look for a definition.
Also on Friday, investors will be looking at the first estimate of Thomson Reuters/University of Michigan Consumer Sentiment Index for March. The final reading for February was 81.6, which was little changed from 81.2 in January. Economists think that the index, which surveys households to see what they think about the conditions of the economy, will stay relatively flat again this month.