After a busy schedule last week, which included that latest unemployment rate on Friday, economic data will slow this week with no “market moving” information coming until Thursday and Friday. Investors and economists have been tearing through all things related to the health of the U.S. economy trying to place bets on how that data will impact the Federal Reserve’s decision to throttle down its policy of buying $85 billion each month in Treasuries and mortgage-backed securities that have been helping support the economy.
The consensus has been that the Fed will start scaling back its purchases this month to a range of $60 billion to $65 billion. Those guesstimates were softened after Friday’s jobs report that showed the U.S. only added 169,000 new jobs in August with July’s figure undergoing a steep revision from an original estimate of 162,000 jobs to 104,000. Moreover, June’s figure was downwardly revised as well, from 188,000 to 172,000. Now economists believe that a “light” version of “Septaper” will see the central bank only reducing asset purchases by $10 billion to $15 billion.
This week, investors will be looking at market moving data that includes:
Initial Jobless Claims for the Week Ended September 7 – Last week, the Labor Department reported that first-time filings for jobless benefits dropped by 9,000 to a seasonally adjusted 323,000 for the week ended August 31. The four-week moving average, a less volatile gauge of the labor market, declined by 3,000 to only 328,500. That’s the lowest level since October 2007. The problem hasn’t been initial claims, a proxy for weekly layoffs. Employers seem content keeping staffers, but are reluctant to hire new workers as shown by the recent employment situation report. Economists are expecting an uptick in claims for the recent week, with predictions of claims at 330,000.
Producer Price Index for August – Last month, the Labor Department reported that wholesale prices were flat in July, after surging 0.8 percent in June. Passenger car prices declined 1.1 percent, marking their biggest one-month move since 2009, and wholesale energy prices slipped 0.2 percent. So-called “core” PPI, which excludes energy and food, rose 0.1 percent after a 0.2 percent increase in June, indicating that inflation continues to remain muted. For August, economists are calling for headline PPI to rise by 0.2 percent and core PPI to increase 0.1 percent.
Retail Sales for August – For July, the Commerce Department reported that retail sales rose 0.2 percent to $424.5 billion from June. The gains were broad with 9 of the 13 main categories showing improved sales during the month, even with an upward revision for the month of June from 0.4 percent gains to 0.6 percent gains, compared to May. “Core” retail sales, which exclude the volatile categories of gas and autos, rose by 0.5 percent, representing the best monthly move in core sales in 2013. Compared to July 2012, retail sales were up 5.4 percent. For August, economists are expecting the trend to continue, forecasting a 0.5 percent increase in headline retail sales and a 0.2 percent rise in core sales.
To a lesser extent, investors will also be watching the first estimate of the Reuters/University of Michigan Consumer Sentiment Index for September on Friday.