The Week Ahead

U.S. investors are planning for a busy week ahead with the June non-farm payroll jobs report out on Friday and the minutes from the Federal Reserve’s June meeting due earlier in the week on Wednesday.

Economists from have a consensus forecast of 175,000 non-farm payroll jobs added in June which would mark an improvement after May’s non-farm payroll report disappointed and plunged to only 38,000, the lowest level since September 2010, during a month when a Verizon strike took 35,000 company employees off telecom payrolls and energy companies and manufactures cut back on hiring.

Over the past 3 months, non-farm payroll job gains have only averaged 116,000 per month, a sharp reversal from the 219,000 job average during the prior 12 months.

Job revisions during the past 2 months have decreased by 59,000.

The Fed Minutes from the Federal Reserve’s June meeting in the middle of the month will likely see the justification Fed Committee members used to delay hiking interest rates.

It is expected that Fed members voiced concerns about the Brexit vote on June 23rd along with recent weakness in the U.S. labor market.

Despite recent sluggishness in the labor market, U.S. inflation levels are gradually rising closer to the Fed’s 2 percent target and U.S. consumers are still spending at decent levels in the economy.

Last week, the Federal Reserve’s preferred inflation gauge, core PCE index (minus food and energy), came in at 1.62 percent in May, slightly higher than the revised 1.58 percent in April.

The third estimate of 1Q 2016 GDP was reported last week as 1.1 percent,  a small improvement from 0.8 percent in the 2nd estimate.

Still after Britain’s June 23rd referendum vote to leave the EU, there remains more uncertainty about the global outlook, leading to more economists pushing back their anticipated timeline for when the Federal Reserve will raise interest rates.

Upcoming U.S. Economic Calendar

Besides the June non-farm payroll report on Friday and the June Fed Minutes released on Wednesday, investors will also be paying close attention to factory orders for May that will be reported today Tuesday July 5th.

On Wednesday ISM services for June and the trade balance for May will come into focus along with crude inventories, and the June Fed Minutes.

On Thursday, private payroll processor ADP will report the private payroll change for June. Some of the other economic data released on Thursday includes Challenger Job Cuts (June), and Natural Gas Inventories.

Friday will see the non-farm payroll report and consumer credit for May.

Written By: John Schweitzer







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