I would refer you to The Heisenberg Report’s: ‘Now Hiring: Full Week Ahead Preview‘
We expect construction spending to increase by 0.6% mom in August, accelerating from the 0.1% mom growth in July and driven by a pick-up in nonresidential spending. The factors supporting our view are an increase in seasonally adjusted federal defense outlays of 15.6% mom and a 0.4% mom increase in nonresidential construction employment. Meanwhile, we look for residential spending to pick up as well with housing starts increasing by 9.2% mom in August and construction employment in the residential sector up 0.5% mom.
ISM manufacturing should decline to 60.0 in September from 61.3 previously, remaining firmly in expansionary territory as strong domestic demand continues to fuel manufacturing activity. We also take signal from the array of regional manufacturing indexes which were, on balance, little changed on the month.
Total vehicle sales
We estimate that light vehicle sales in September will decline roughly 4% yoy to 17.0mn saar. As our auto analysts noted before, the industry may have reached an inflection point due to natural disasters in 2H17 that deflated August sales but inflated September-November via scrap replacement demand and additional nationwide support from the spike in used car pricing.
We look for ADP private payrolls to increase by 195k in September following a soft reading of 163k in August. We look for a nice rebound in the ADP numbers as our private payrolls tracker based on internal BAC data points to a robust 234k increase in employment in September and other labor market indicators continue to point to solid employment activity over the month. We think there will be limited signal from the ADP number in predicting the BLS employment figures as the two series have diverged in recent months.
We look for the September ISM non-manufacturing index to edge down to 58.0 from 58.5 previously, continuing to signal robust activity in the sector. We take signal from consumer confidence surveys and regional service sector surveys, which generally strengthened in September. Additionally, the labor market differential index from the Conference Board rose to a cyclical high suggesting that the employment index will remain well above 50.
Initial jobless claims
We expect initial jobless claims to be 210k in the week ending September 28, a modest decline from 214k claims in the prior week. Initial claims came off its cyclical nadir in the latest reading, though still remains at very low levels indicating that the labor market remains very tight. The 4-week moving average remained little changed at 206k in the latest reading.
After a worse than expected reading of the advance goods trade deficit, we expect the August total trade deficit to deteriorate by $4.3bn to $53.8bn. The weakness stemmed from a 1.6% mom plunge in goods exports and 0.7% mom increase in goods imports in the advance estimate, which was partially due to the strengthening of the dollar.
-R.W.N II, yours in 322.
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