The March 2 week will include all of the early-month data, from manufacturing ISM on Monday to employment on Friday. Nonfarm payrolls are expected to rise by 245,000 in the February, with private payrolls also seen up 245,000 and the unemployment rate expected to fall back to 5.6%. Previous misses in February over the last 10 years have tended to be small and most recently to the low side. Other data for the week will include personal income, vehicle sales, and international trade.
Here is a closer look at the key data in the coming week:
NONFARM PAYROLLS FOR FEBRUARY, FRIDAY, MARCH 6, AT 8:30 A.M. ET
Nonfarm payrolls are forecast to rise by 245,000 in February after larger-than-expected gains in the previous three months. The unemployment rate is expected to decline to 5.6% after rising to 5.7% in January. Hourly earnings are forecast to rise 0.2%, while the average workweek is expected to hold steady at 34.6 hours for another month. If the payrolls forecast were realized and there was no major revision to the January reading, the 1Q average would remain well below the 4Q average most recently recorded as a 324,000 gain.
Over the last 10 years of forecasts for February payrolls, there were three overestimates and seven underestimates, including each of the last three years, a clear indication of a trend. The absolute average miss of 33,900 over that 10-year period was smaller than the 66,500 average over the same 10-year period for January payrolls. Given that there have also been underestimates in four of the last five months, the data suggest another modest underestimate for this month’s release.
The 257,000 payrolls gain in January marked a third straight underestimate and followed sharp upward revisions to the previous two months that intensified the market impact. After incorporating the annual benchmark revisions, there was still only one downward revision from the first estimate to the most recent published estimate over the last year, and that one was by only 2,000 in June 2014.
PERSONAL INCOME AND PCE FOR JANUARY, MONDAY, MARCH 2 AT 8:30 A.M. ET
Personal income is expected to rise 0.4% in January, as payrolls rose 257,000 and hourly earnings surged 0.5%. The average workweek was unchanged at 34.6 hours. Nominal PCE is expected to fall 0.1% as retail sales down 0.8% and were down 0.9% excluding motor vehicles and up only 0.2% also excluding gasoline. The core PCE price index is forecast to rise 0.1% after flat readings in the previous two months.
CONSTRUCTION SPENDING FOR JANUARY, MONDAY, MARCH 2 AT 10:00 A.M. ET
Construction spending is expected to rise 0.3% in January after a smaller-than-expected gain in December. Housing starts fell in the month, but remained on an upward trend, suggesting that private residential construction will post another increase in the current month.
ISM MANUFACTURING INDEX FOR FEBRUARY, MONDAY, MARCH 2, AT 10:00 A.M. ET
The ISM manufacturing index is expected to decline to a reading of 52.9 in February, which would be a fourth straight decline. Regional conditions were generally softer in the month due to harsh winter weather, but the flash estimate for the Markit Manufacturing index rose modestly from the previous month.
Over the last 20 years, analysts have overestimated manufacturing ISM in February eight times, with an average miss of 1.36. There were 12 underestimates by a slightly larger 1.37 average. The overall absolute average miss was 1.37, much smaller than 1.77 in January. When sign is considered, the average miss was -0.28. Looking at just the last ten years, when there were three overestimates and seven underestimates, the absolute average miss was 1.41, much smaller than 2.45 average in January. February 2014 ISM was underestimated, likely payback for a large overestimate in the previous month, when the economy was impacted by a severe storm in the Northeast.
DOMESTIC MOTOR VEHICLE SALES FOR FEBRUARY, TUESDAY, MARCH 3
Domestic-made light vehicle sales are expected rebound modestly after dipping slightly to 13.2 million in January, with some downside risk due to the harsh weather seen in much of the Northeast. Seasonal adjustment factors are still accommodative in February, though not as much as in January, so unadjusted sales would be expected to post modest gains.
NONMANUFACTURING ISM FOR FEBRUARY, WEDNESDAY, MARCH 3 AT 10:00 A.M. ET
The ISM non-manufacturing index is expected to fall very slightly to a reading of 56.5 in February after a small increase in January. Regional services conditions data pointed to stronger growth in activity, which was confirmed by a sharp increase in the Markit Services index.
WEEKLY JOBLESS CLAIMS FOR FEBRUARY 28 WEEK, THURSDAY, MARCH 5 AT 8:30 A.M. ET
The level of initial jobless claims is expected to retreat by 18,000 to 295,000 in the February 28 week after rising by 31,000 in the previous week. The four-week moving average rose by 11,500 to 294,500 in the February 21 week after four straight declines. The January 31st week’s 279,000 level will roll off the four-week average calculation as the current week's is added, which would result in a further increase of 4,000 in the moving average if the MNI forecast is realized, all else being equal.
Seasonal adjustment factors expect unadjusted claims to rebound in the February 28 week after a 2,096 rise in the February 21 week. In the comparable week a year ago, unadjusted claim rose by 5,167. Seasonal factors had expected a larger rebound, the reverse of the previous week, so claims fell by 26,000 that week.
FINAL PRODUCTIVITY FOR FOURTH QUARTER, THURSDAY, MARCH 5, AT 8:30 A.M. ET
Nonfarm productivity is expected to be revised down to a 2.4% annual rate for the fourth quarter from the 1.8% decline in the preliminary estimate. Output growth is expected to be revised down based on the GDP data released on February 27. Unit labor cost growth is expected to be revised up to a 3.3% rate of growth from the 2.7% growth pace in the preliminary estimate.
FACTORY ORDERS FOR JANUARY, THURSDAY, MARCH 5 AT 10:00 A.M. ET
Factory new orders are expected to fall by 0.1% in January, maintaining the recent string of declines. Durable goods orders rose 2.8% in the month, but nondurable goods orders are forecast to fall sharply on a price-related drop in petroleum and coal products.
INTERNATIONAL TRADE FOR JANUARY, FRIDAY, MARCH 6, AT 8:30 A.M. ET
The international trade gap is expected to narrow to $40.6 billion in January following a sharp widening of the gap in the previous month. Boeing reported a drop in aircraft deliveries to foreign buyers while manufacturing industrial production was up only modestly, suggesting soft exports. At the same time, import prices fell 2.8% and were still down 0.7% excluding petroleum products.
CONSUMER CREDIT FOR JANUARY, FRIDAY, MARCH 6, AT 3:00 P.M. ET
Consumer credit usage is forecast to rise $15.5 billion in January, a stronger gain than those seen in November and December. Retail sales fell 0.8%, while sales were down 0.9% excluding motor vehicles and were up only 0.2% also excluding gasoline station sales. Nonrevolving credit use growth in December was the smallest in nearly three years, but could improve in January.
MNI is a wholly owned subsidiary of Deutsche Börse Group.
This article is from Market News International (MNI) and is being posted with MNI’s permission. The views expressed in this article are solely those of the author and/or MNI and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.