After some disappointment that the key employment situation report was not delivered on Friday due to the government shutdown, investors will be looking for new economic data this week that will likely not come either. The caveat for this week is that if the shutdown continues, the government will not deliver three of the key pieces of economic data listed below: International Trade, Retail Sales and PPI. In fact, the government has said that it will need three days from the time the shutdown ends to process the information from last week's undelivered non-farms payroll report. It's presumable that the same type of time frame will be needed for the aforementioned reports that will not come as long as the shutdown is in effect.
From a broader perspective, the shutdown and looming debt ceiling issues have shifted some sentiment towards economic data. In recent months, economic reports were all about how it may impact the Federal Reserve scaling-back its massive asset purchase program that has been helping prop up the country for more than one year. Now economists will be culling the data to see how businesses were reacting in September while starring at a shutdown that ultimately happened at the first of October. Further, the vast majority of analysts expected the Fed to begin tapering in September, which, of course, did not happen. Now there is a growing choir of voices that believe tapering may not happen at all in 2013 because of the impasses in Washington over a budget and the debt ceiling, rooted in turmoil surrounding healthcare reform.
“Market moving” data that normally would be coming this week includes:
International Trade for August – Last month, the Commerce Department said that the trade deficit widened by 13.3 percent to $39.1 billion in July. June's deficit was revised to $34.5 billion from the original estimate of $34.2 billion, which was the smallest deficit since October 2009. Higher imports were largely behind the widening of the trade deficit, rising 1.6 percent to $228.59 billion, led by increases in crude oil and semiconductors. Exports declined 0.6 percent to $189.45 billion, as shipments dropped for aircraft and industrial engines. For August, economists are expecting the trade deficit to widen slightly, calling for a shortage of $39.7 billion.
Federal Open Market Committee Minutes – The FOMC releases the minutes from its latest meeting at a three-week lag. Investors will be looking for any commentary on plans for stimulus, but the latest press conference in September that delayed tapering pretty much spelled things out. More importantly regarding the Fed, investors will be looking ahead to the meeting at the end of October.
Initial Jobless Claims for the Week Ended October 5 – Last week, the Labor Department reported that initial jobless claims for the week ended September 28 was 308,000, up slightly from a revised figure of 307,000 the week prior (revised up from 305,000). The four-week moving average, a less volatile measure of labor trends, dropped by 3,750 a week earlier to 305,000, representing the lowest level since May 2007 and fifth consecutive weekly decline. Economists are expecting claims to be relatively flat for the latest week, forecasting claims at 311,000.
Producer Price Index for September – The Labor Department reported that the PPI, which measures prices paid to refineries, factories and farms, rose 0.3 percent in August from July, after no change the month prior, signaling that inflation remains muted in the country. So-called "Core" PPI, which excludes energy and food, was flat in August from July, breaking a string of nine consecutive monthly advances. For September, economists are calling for a 0.2-percent increase in headline PPI and a 0.1- percent increase in the core value.
Retail Sales for September – Last month, the Commerce Department said that retail sales rose less than expected in August, indicating that Americans are keeping their spending in check in the second half of 2013. Retail sales increased 0.2 percent in August from July to $426.6 billion, representing the smallest gain in four months. "Core" retail sales, which exclude autos, gasoline and building materials, rose 0.2 percent in August from July. Economists are expecting September’s headline retail sales figure to show no growth from August, but a 0.3-percent rise in the core figure.
To a lesser extent, investors will also be looking at the initial estimate of the Thomson Reuters/University of Michigan Consumer Sentiment Index.