Now that the bickering in Washington kicked the can on a budget and debt ceiling until early in 2014 and the 16-day partial government shutdown has ended, economic data will start being gradually released again. The idea of the Federal Reserve tapering its massive $85 billion per month in asset purchases, known as quantitative easing, that was all the rage of speculation took a backseat during the shutdown and debt limit talks. Tapering should once again become a popular topic with investors and economist looking to economic reports to gauge any potential moves of the central bank. As the data starts trickling in, economists will be looking for the true impact of the shutdown as the holiday season approaches, keeping it unlikely that the Fed will make any moves in the near term. This week will be highlighted by the employment situation report for September from the Labor Department that was delayed from arriving on October 4 because of the shutdown. Investors should take note of the fact that many of the upcoming reports will be delayed as the nation's number-crunchers get back to work.
“Market moving” data this week will include:
Existing Home Sales for September – Last month, the National Association of Realtors said that existing home sales increased 1.7 percent in August to an annual rate of 5.48 million units, representing the highest level since February 2007, topping expectations. Rising interest rates have been cited as a reason for potential homebuyers to quickly make a decision to buy a home and lock in rates before they climb higher. Inventory at the end of August rose modestly to a 4.9-month supply level, still below the 6-month level considered to be a healthy market. For September, economists are expecting sales to slip to a 5.3 million annualized rate.
Employment Situation for September – For August, the Labor Department reported that the country added fewer jobs than forecast with 169,000 jobs created. The unemployment rate ticked down to 7.3 percent from 7.4 percent in July, but only because more people gave up on looking for work. The proportion of people with a job or actively seeking a job dropped to 63.2 percent, the lowest level in 35 years. Further, June and July figures were downwardly revised, with June’s job additions cut from 188,000 to 172,000 and July’s gashed from 162,000 to only 104,000. Economists are looking for a strong month of September, predicting that the country added 185,000 jobs and that the unemployment rate held at 7.3 percent.
Initial Jobless Claims for the Week Ended October 19 – Last week, the Labor Department said that initial jobless claims for the week ended October 12 dropped from six month highs, although still remained elevated because of the shutdown and California still trying to process a backlog of claims after a computer upgrade glitch. First-time filings were lower by 15,000 to a seasonally adjusted 358,000 from the week earlier. The four-week moving average of initial jobless claims, generally a better gauge of labor trends, rose by 11,750 to 336,500, representing the highest level since July. Bottom line here is that it is going to take some time to iron out the temporary factors of California and the shutdown, making it difficult to get an accurate read on claims right now. For the recent week, economists are expecting claims to total 336,000.
New Home Sales for September – This report is scheduled to be delivered on the 24th, but is delayed because of the shutdown. Last month, the Commerce Department reported that new home sales bounced back in August, climbing 7.9 percent to a seasonally adjusted annual rate of 421,000. In July, the annualized right sunk to a revised 390,000. Compared to August 2012, new home sales were up 25 percent. Inventory stood at 175,000, enough for 5 months of sales and down slightly from 5.2 months in July. Economists expect September to be flat as compared to August for the annualized rate (421,000).
Durable Goods Orders for September – This report is also possibly going to be postponed. New orders for durable goods, items ranging from toasters to jets meant to last more than three years, have been volatile in recent months because of aircraft and auto orders. Excluding transportation, orders have been relatively weak. Last month, the Commerce Department said that orders increased 0.1 percent in August, marking the fourth rise in five months after a 8.1-percent nosedive in July. Excluding transportation, new orders decreased by 0.1 percent. So-called "core" capital goods orders, a barometer of future business spending, increased 1.5 percent after falling 3.3 percent in July. For September, the headline index is expected to rise 2.8 percent. Ex-transportation, new orders are expected to climb 0.5 percent.
Obviously the shutdown has made a great impact on reports from Washington. The employment situation report is one of the first to be scheduled since being delayed. As shown, others slated for this week are likely to be pushed back and subsequent reports are already tentatively delayed.