U.S. Jobs Data Expected to Move The Market, Impact Rate Decision; The Week Ahead

stoitoLast week investors  pushed U.S. stock indexes higher to their best monthly gain since October 2011 in an action packed week filled with lots of economic data, earnings reports, and a released Fed policy statement that opens up the possibility the Federal Reserve could be close to raising interest rates in December for the first time since 2006.

The Fed’s latest statement, released  last week on October 28th after their 2 day monetary policy meeting, notes that information received since the September policy meeting suggests that economic activity has been expanding at a moderate pace and “labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year.”

Overall economic data from last week was clearly negative and disappointing with new home sales and pending home sales for September coming in well below forecast, consumer confidence weakening, 3rd quarter GDP revised lower from 3.9 percent to 1.5 percent, and core PCE inflation, the Fed’s preferred inflation gauge, remained stagnant and increased only 0.1 percent in September.

This week U.S. job growth will come into focus and the results could sway Fed policymakers in one direction as they weigh the possibility of an interest rate hike in December when they will meet for their next policy meeting from December 15-16th followed by a press conference and a summary of economic projections.

The Federal Reserve has held interest rates near zero with the federal funds since December 2008 during the depths of the global economic recession.

Private payroll tracker ADP will release October’s employment change this Wednesday, weekly jobless claims will be announced on Thursday, and the non-farm payroll report for October, a closely watched employment report, will be released on Friday from the Bureau of Labor Statistics with the Department of Labor.

Economists from briefing.com forecast non-farm payroll growth of 167, 000 in October following September’s disappointing 142,000 increase.

The unemployment rate is expected to tick slightly higher in October to 5.2 percent from 5.1 percent.

The last 2 months of employment data has shown weakness with non-farm payroll growth dropping below 200,000.

In 2015, job growth has averaged 198,000 per month, compared with an average monthly increase of 260,000 in 2014.

Some of the other market moving economic data reported this week includes manufacturing data with an ISM index reading for October released on Monday.

Economists from briefing.com forecast a drop in manufacturing data to 49.9 in October from 50.2 in September.

Construction spending for September is also reported on Monday.

Auto and truck sales for October will be reported on Tuesday along with factory orders for September.

ISM Services for October will come into focus on Wednesday.

Full Economic Calendar

Monday- ISM Index (October), Construction Spending (September)

Tuesday- Factory Orders (September), Auto-Truck Sales (October)

Wednesday- ADP employment change (October), MBA Mortgage Index, ISM Services (October), Trade Balance (September), Crude Inventories (10/31)

Thursday- Initial and Continuing Jobless Claims, Challenger Job Cuts (October), Natural Gas Inventories

Friday- Non-farm payroll report (October), Consumer Credit (September)

-Johnathan Schweitzer               schweitz31@gmail.com

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