Key U.S. Data Releases and Events

On the positive side, inflation risks have dropped off the radar screen, and the Fed's massive programs to support short-term bank funding and the money and commercial paper markets, in conjunction with the Treasury's recent capital infusions to the banking sector, are starting to yield some results in terms of getting credit flows rebooted.

KEY U.S. DATA RELEASES THIS WEEK

Monday, November 3 – Construction Spending (Sep.)

Construction Put in Place
Global Insight: -1.5%
Consensus: -0.8%
Last Actual: 0.0% (Aug.)

Construction Excl. Residential Improvements
Global Insight: -1.0%
Last Actual: -1.1% (Aug.)

What to Look For

• Total construction spending to be down by 1.5%.
• Big drops in single-family and residential improvements.
• Nonresidential construction to see downward pressure.

Implications

We are expecting a small gain in public construction, but big drops in single-family construction and residential improvements, along with smaller drops in private nonresidential construction and multi-family construction. By the end of the year, every construction category—residential, private nonresidential, and public construction—will be dropping. The downturn in nonresidential construction could be long and severe.

Monday, November 3 – ISM Manufacturing Index (Oct.)

Global Insight: 39.0
Consensus: 41.5
Last Actual: 43.5 (Sep.)

What to Look For

• Index to decline below 40, reflecting recessionary conditions in the economy.

Implications

The ISM-manufacturing index is expected to dip below 40 for the first time since early 1991. The September index described a manufacturing sector where orders are falling off a cliff and pulling down output, as exports fade as a prop; October threatens to be more of the same. A key number to watch will be the export orders index, which fell 5 points in September, to 52; a drop even half that bad would push export orders into retreat for the first time since 2001.

Monday, November 3 – Motor Vehicle Sales (Oct.)

Global Insight: 12.0 Mil.
Consensus: 12.0 Mil.
Last Actual: 12.5 Mil. (Sep.)

What to Look For

• Sales to decline further, to 12.0 million units.

Implications

We expect light-vehicle sales to dip further in October, to 12.0 million units. Responding to dramatically worse turbulence in the financial markets, declining employment, and tight credit conditions, car dealer showroom traffic slowed to record-low levels (last seen following the 9/11 attacks and Hurricane Katrina). With conditions not expected to improve in the fourth quarter, consumers will continue to postpone big-ticket item purchases for the time being.

Wednesday, November 5 – ISM Nonmanufacturing Index (Oct.)

Global Insight: 46.0
Consensus: 47.5
Last Actual: 50.2 (Sep.)

What to Look For

• The composite index is expected to drop by several points.

Implications

The ISM index for services is expected to plummet in October, to 46.0 (with some chance that it could move closer toward January's 44.6 level). Shipping volumes have dropped sharply in the past few weeks, while retail sales and auto sales also fell. In addition, we saw further negative pressure on financial and commodity markets—stock markets plunged, commodity prices tumbled, and volatility spiked to unprecedented levels across all markets.

Thursday, November 6 – Productivity (Preliminary Q3)

Nonfarm Business Productivity
Global Insight: -0.2%
Consensus: +0.9%
Last Actual: +4.3% (Final Q2)

Unit Labor Costs
Global Insight: +4.5%
Consensus: +2.7%
Last Actual: -0.5% (Final Q2)

What to Look For

• Productivity finally to be pushed down by negative cyclical forces.

Implications

We expect productivity to decline 0.2%, on a 1.7% drop in output, steeper than a 1.5% drop in hours. Cyclical forces are behind the productivity slowdown. Once the economy gets back on track, productivity growth will bounce back.

Friday, November 7 – Employment Report (Oct.)

Nonfarm Payrolls
Global Insight: -250,000
Consensus: -198,000
Last Actual: -159,000 (Sep.)

Unemployment Rate
Global Insight: 6.3%
Consensus: 6.3%
Last Actual: 6.1% (Sep.)

Average Hourly Earnings
Global Insight: +0.2%
Consensus: +0.2%
Last Actual: +0.2% (Sep.)

What to Look For

• A large 250,000 decline in payroll employment.
• The unemployment rate will move up a couple of notches, to 6.3%.

Implications

We expect a 250,000 plunge in payroll employment during October, the steepest drop so far in this downturn. The decline will be exaggerated by the 27,000 striking Boeing workers, who will drop out of this month's payroll count; but even allowing for that, the jobs decline would exceed the 159,000 loss we saw last month. The evidence from unemployment insurance claims (rising) and from consumer perceptions of the labor market (much harder to find a job) points to a sharply deteriorating picture. We expect the unemployment rate to move up two notches, from 6.1% to 6.3%.