Was July another sub-par month for jobs? Probably. We expect that the economy added just 90,000 to payrolls, up only slightly from the 75,000 average of the previous three months.
The unemployment rate is expected to stay at 8.2%. Layoffs have slowed, but businesses are increasingly reluctant to hire in the face of Eurozone and US fiscal risks.
Unless payrolls surprise us strongly to the upside (including positive revisions to the past few months), the Fed is on track to respond this fall with another round of easing.
Wednesday, August 1 ? Construction Spending (Jun.)
Construction spending likely increased 0.5% in June. Strong gains in single- and multifamily construction offset another drop in public construction.
Wednesday, August 1 ? ISM Manufacturing Index (Jul.)
The ISM Manufacturing Index is expected to inch lower to 49.5 in July, just shy of the neutral reading of 50. A slight pullback in manufacturing continued last month, and could persist. But we don?t expect the index to fall into recession territory.
Wednesday, August 1 ? FOMC press conference
With Q2 GDP growth coming in as expected and historical revisions generally benign, we don?t think the Fed is itching to pull the trigger on another round of easing. So, next week?s meeting will be a quiet one and the Fed will wait until September when it can next downgrade its forecasts.
Wednesday, August 1 ? Motor Vehicle Sales (Jul.)
July?s light vehicle sales volume will likely be similar to June?s, up just slightly at 14.1 million. Inventory levels for both passenger cars and light trucks have been creeping upward and incentive programs to move older model-year (2012) vehicles have been prevalent this month.
Friday, August 3 ? Employment Report (Jul.)
We expect another weak employment report for July. Initial unemployment insurance claims have been very volatile in recent weeks, making it hard to use them as a guide, but there's little evidence of any pick-up in the labor market. We are expecting an overall increase in jobs of 90,000 in July, slightly better than the 80,000 in June, because we don't expect job creation in education and health services to be as weak as it surprisingly was in June. We expect the unemployment rate to be unchanged at 8.2%.
Friday, August 3 ? ISM Non-Manufacturing Index (Jul.)
The ISM Non-Manufacturing Index is expected to have picked up to 52.6 in July after falling to 52.1 in June. While the manufacturing sector contracted this month and last, most non-manufacturing industries continued to expand. However, the rate of growth has slowed from earlier in the year thanks to weaker exports and domestic headwinds, and may not pick up anytime soon.
