Key U.S. Data Releases and Events

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, July 1 – Construction Spending (May)

Construction Put in Place
Global Insight: -0.2%
Consensus: -0.6%
Last Actual: -0.4% (Apr.)

Construction Excl. Residential Improvements
Global Insight: -0.2%
Last Actual: -0.4% (Apr.)

What to Look For

• Overall construction spending is expected to drop 0.2%.

Implications

The drag from housing is starting to diminish. Spending on single-family construction likely dropped 3.7–4.0% in May, which would be its smallest drop in eight months. We also expect another 1% or greater increase from nonresidential construction, a fourth straight gain from multi-family construction, and a small advance from public construction. Overall, we project that construction spending dropped 0.2% in May.

Tuesday, July 1 – ISM Manufacturing Index (Jun.)

Global Insight: 48.0
Consensus: 48.7
Last Actual: 49.6 (May)

What to Look For

• The index is expected to drop just less than 2 points, to 48.0.

Implications

Output should be the main drag on the index, since May showed an unusual reading above 50, which conflicts with the fact that core manufacturing output is on a clear downturn. On the plus side, export orders should remain above 55, because growth in Europe and the emerging markets has been holding up very well, and the low level for the U.S. dollar is attracting demand for U.S. capital goods.

Tuesday, July 1 – Motor Vehicle Sales (Jun.)

Global Insight: 13.2 Mil.
Consensus: 14.1 Mil.
Last Actual: 14.3 Mil. (May)

What to Look For

• Sales expected to drop sharply, to 13.2 million units (annual rate).

Implications

Vehicle sales keep sliding downward, notwithstanding the large fiscal-stimulus payments, as consumers are shying away from big-ticket outlays. Demand for large SUVs and trucks has plummeted in response the spike in gasoline prices. The low sales rate in June points in the direction of further output cuts during the second half of 2008, which will continue to depress overall growth and put downward pressure on manufacturing employment.

Thursday, July 3 – Employment Report (Jun.)

Nonfarm Payrolls
Global Insight: -35,000
Consensus: -60,000
Last Actual: -49,000 (May)

Unemployment Rate
Global Insight: 5.4%
Consensus: 5.4%
Last Actual: 5.5% (May)

Average Hourly Earnings
Global Insight: +0.2%
Consensus: +0.3%
Last Actual: +0.3% (May)

What to Look For

• Payroll employment to drop by 35,000.
• Unemployment rate is expected to edge down slightly.

Implications

We expect nonfarm payroll employment to decline again in June, this time by 35,000, slightly less than the 49,000 drop in May. Initial unemployment insurance claims continue to edge higher, but not so steeply as to point to a severe drop in employment. The unemployment rate, which leapt from 5.0% in April to 5.5% in May, has probably overshot, and we expect it to ease to 5.4% this month. But the trend in the rate remains clearly upwards.

Thursday, July 3 – ISM Non-Manufacturing Index (Jun.)

Global Insight: 51.0
Consensus: 51.0
Last Actual: 51.7 (May)

What to Look For

• Composite index is expected to decline to about 51.0 in June.

Implications

The ISM services index is projected to decline to about 51.0 in June. Business activity should pull back slightly, because manufacturing and freight activity has declined in recent weeks, even though retail sales picked up in May. In addition, services employment conditions have deteriorated in recent weeks, especially in banking services. Thus, the employment index will likely decline, and new orders are expected to pull back as well. The services sector continues to be weighed down by serious problems in the financial industry, problems that will not go away for at least another quarter.