Eco Reports for week ending 12/8/06

[MrPaul 10]

When looking at the week ahead it's sometimes easy to forget the larger picture in development, and how different components tie in with each other. Here's a wrap up for this week that goes through each report and examines it's importance and how it fits into the larger picture. Trading around economic reports can be extremely profitable if your ready and understand how the report can affect the market (i.e having your finger on the trigger when the big fish start pounding the bid/ask). It's always good to be prepared.

 

Here's an ecomonic calendar:

Barron's Economic Calendar

 

Here's the wrapup:

Monday

 

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET on Monday. A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

 

Pending Home Sales Index slipped 1.1% to 109.1 in September following a 4.5% advance in August. The Index is about 13.6% below the reading found in September 2005. NAR's chief economist David Lereah said then," The market is currently a little lower than expected as buyers try to time their entry. In the meantime, there is some build up in demand that will move when consumers realize that conditions are optimal for them."

 

Tuesday

 

Productivity, which measures the efficiency in producing the economy's goods and services and Unit labor Costs, which reflect the labor costs for producing each unit of output, is scheduled for release at 8.30 AM ET on Tuesday. The final reading is expected to reveal that productivity stalled in the third quarter.

 

The preliminary estimate of third quarter productivity of the non-farm business sector revealed flat performance compared to expectations for 1.2% growth. Meanwhile, productivity of the business sector as a whole rose by 0.1% in the third quarter. On a year-over-year basis, productivity growth was 1.3% for the non-farm business sector and 4.3% for the manufacturing business.

 

Meanwhile, third quarter unit labor Costs of the non-farm business sector rose 3.8% from the preceding quarter, while the year-over-year gain is at 5.3%. The increase in third quarter unit labor cost marked the biggest gain since 1982.

 

The Bank of Canada's Governing Council is set to make an announcement on its interest rate policy for the nation at 9 AM ET on Tuesday. The Committee meets once in every six weeks on a pre-determined scheduled to deliberate on its monetary policy.

 

The central bank left its key interest rates unchanged at 4.25% in its October meeting. The bank has held rates at the current levels since May 2006.

 

The dollar value of new orders for both durable as well as non-durable goods for the month October is scheduled for release at 10 AM ET on Tuesday. Economists expect the Factory Orders to have slipped 2% in October.

 

New orders for manufactured goods jumped 2.1% in September to $411.2 billion following two consecutive monthly declines. However, the Shipment Index declined 3.5% to $392.4 billion. The Unfilled Orders Index climbed 3.9% in September after 0.5% growth in August. The Inventories Index rose by 0.6% in September, the same pace as in August.

 

Meanwhile, durable goods orders registered a steep decline of 8.3% in October following a 8.7% gain in September and flat performance in August. Excluding the volatile transportation orders, durable goods orders eased 1.7% in October. In September, the measure edged up 0.5%.

 

Shipments of durable goods increased 0.6% in October, reversing the 2.7% decline in September. Meanwhile, unfilled orders edged up by 1.2%, extending the 4.1% gain of September. The inventories index fell 0.8% in October following a 1.1% increase in September.

 

The survey results of the ISM on conditions in the non-manufacturing sectors such as agriculture, mining, construction, transportation, communication, wholesale trade and retail trade is likely to be released at 10 AM ET on Tuesday. The composite diffusion index based on the 400-firm survey is expected be 56.5 for the month of November.

 

Growth in the services sector increased at a faster rate in September. Nine of the 18 non-manufacturing industry sectors reported increased activity in the month. The Business Activity Index rose 4.2 points to 56.5, while economists had expected a reading of 54.5. The New Orders Index eased 0.7 points to 56.5 and the Employment Index fell 2.6 points to 53.6. However, the Prices Index slipped by 4.8 point to 51.9.

 

Wednesday

 

The ADP Employment report is scheduled for release at 8.15 AM ET on Wednesday. The report is a private survey that covers 14 million private employees at roughly 225,000 business establishments.

 

The Energy Department's Crude Inventory report is likely to be released at 10.30 AM ET on Wednesday.

 

The weekly inventory data revealed that crude stocks eased 0.3 million barrels to 340.8 million barrels in the week ended November 24th. Despite the slight slippage, inventories of crude stocks remain well above the average range for this time of the year. Gasoline and distillate stocks declined by 0.6 and 1 million barrels in the recent week. Refinery capacity utilization was at 87.9% in the week ended November 24th, compared to the same level in the previous week, but higher than the 87.6% in the year-ago period.

 

Over the last four weeks, gasoline demand averaged around 9.2 million barrels, up 1.2% from the same period last year. Distillate and jet fuel demand increased by 7.1% and 0.3%, respectively in the same period. The price of gasoline was $2.246 in the week ended November 27th compared to $2.239 in the previous week and $2.154 in the week ended November 28th, 2005.

 

Thursday

 

The weekly Jobless Claims data for the week ended December 2nd is likely to be released at 8.30 AM ET on Thursday.

 

Jobless Claims report for the week ended November 25th revealed that the number of individuals filing for unemployment benefit for the first time increased by 34,000 to 357,000 from the previous week's revised figure of 323,000. Economists had expected claims to be 316,000 in the recent week.

 

The Monetary Policy Committee of the Bank of England is slated to announce its monetary policy decision at 7 AM ET on Thursday. The Committee consists of nine members and meets for two days in a month to determine the near term monetary policy of the central bank.

 

The bank raised its interest rates by 25 basis points to 5% in its November meeting. The previous change in the bank rate was in August 2006, when the bank raised it by a similar magnitude to 4.75%.

 

In the post-meeting policy statement, the bank noted that the U.K. economy has recorded its fourth consecutive quarter of firm growth. The bank also said that the underlying picture of household spending suggests moderate expansion despite the volatility. Notwithstanding the recent downside in oil prices, the bank noted that other pricing pressures have picked up. With the consumer price index climbing by 2.4% in September, the central bank believes that the index will rise above its target in the near term. Accordingly, the bank felt that an increase in the Bank Rate by 0.25 percentage points to 5.0% was necessary to bring CPI inflation back to the target in the medium term.

 

The European Central Bank's Governing Council is scheduled to meet at 7.45 PM ET on Thursday to decide on its monetary policy. The Committee meets twice in a month, with the first meeting of the month devoted to monetary policy. A statement on the policy would be released roughly 45 minutes after the meeting.

 

The Governing Council held its key interest rates unchanged at 3.25% in its November meeting after nudging it up by 25 basis points in its October meeting. The bank also maintained its marginal lending and deposit rates at 4.25% and 2.25%, respectively, after raising both rates by 25 basis points in its October meeting.

 

Consumer Credit, which is the dollar value of consumer installment credit outstanding, is scheduled for release at 3 PM ET on Thursday. Economists expect Consumer Credit to reveal an increase of $4.5 billion for the month of October.

 

Consumer Credit declined $1.2 billion in September, representing the sharpest drop since 1991. The August reading was revised upward to $9 billion from the originally reported $5 billion. Softer car sales led to a $4.1 billion decline in non-revolving credit in September. Consumer credit rose at an annual rate of 3.5% in the third quarter, a decline from a 6.8% rate in the second quarter.

 

Friday

 

The monthly Jobs report, to be released at 8.30 AM ET on Friday is likely to reveal that the U.S. economy added 125,000 jobs in November. The report sheds light on the employment situation, as reflected by a set of labor market indicators such as non-farm payroll employment counts, the average workweek, average hourly earnings etc.

 

The U.S. economy added 92,000 jobs in October compared to expectations for a 124,000 gain. However, on an encouraging note, the Labor Department noted that the job growth for September and August were revised higher to 148,000 and 230,000, respectively from the originally reported 51,000 and 188,000.

 

Goods producing industries lost 60,000 jobs in the month after losing 6,000 jobs in September. Meanwhile, service providing industries added 152,000 jobs in October after adding 154,000 jobs in September.

 

Meanwhile, the average hourly earnings, which is an inflation measure increased by $0.06 or 0.36% to $16.91 in October. The Jobless rate declined to 4.4% in October from 4.9% in the year-ago period and 4.6% in both August and September of 2006. The Labor Department also said that the unemployment rate unexpectedly fell to a five-year low of 4.4 percent in October from 4.6 percent in September.

 

The preliminary reading of the University of Michigan's Consumer Sentiment Index for the month of December is due out at 9.45 AM ET on Thursday. The reading is expected to show that consumer sentiment held steady around the 92.8 levels in the month.

 

The index came in at 92.1 for November compared to the mid-month reading of 92.3 and October's 93.6. Economists had expected the index to climb to 93.5 in November. The Expectations Index was at 82.3, significantly lower than the Current Conditions Index, which was at 106. Inflation expectations 12 months out eased 0.1 points to 3%.

 

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