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Analysts at Nomura offered the key events for thr week ahead.

Key Quotes:

United States | Data preview

“We expect a solid 180k gain in September nonfarm payroll employment and another healthy gain in average hourly earnings.

Construction spending (Monday): Private residential construction has slowed in recent months with easing of both single- and multi-family residential construction spending. Supply-related constraints such as the lack of skilled labor and developable lots have been weighing on residential investment. In addition, there seem to be signs of deterioration in home affordability increasingly affecting home demand. Subdued growth in private residential investment will continue to weigh on overall construction outlay in Q3. In addition, incoming data on nonresidential structures have been lukewarm, but the ongoing strong momentum in the economy will remain supportive for future growth.

ISM manufacturing index (Monday): Manufacturer sentiment in likely remained elevated considering strong domestic demand, but we forecast a modest 2.3pp decline in the ISM manufacturing index to 59.0 in September considering heightened trade concerns and ongoing capacity constraints. Early incoming regional surveys for September have been mixed so far. These surveys likely did not include the potential impact from the imposition of 10% tariffs on $200bn imports from China effective 24 September. These US tariffs which target a broad range of intermediary goods will likely impact supply chains.  

Vehicle sales (Tuesday): We expect a modest rebound in total light vehicle sales in September to 16.8m saar from 16.6m in August. Rising household wealth and the strong labor market likely supported consumer demand, but credit conditions remain unfavorable. According to the Federal Reserve’s Senior Loan Officer Opinion Survey, the lending standards on consumer auto loans have remained tight in recent quarters while demand for those loans has been soft. Thus, we expect auto sales to slow in July. While monthly estimates of vehicle sales can be volatile, we expect 16.8m for total vehicle sales for 2018 following 17.2mn in 2017.  

ADP private employment (Wednesday): Consistent with our forecast for the September employment report, we expect ADP a report 175k gain in private employment during September.

ISM non-manufacturing index (Wednesday): We expect the strong economic momentum to remain supportive for the non-manufacturing sector and forecast a reading of 57.5 for September, slightly below 58.5 in August. The recent escalation in US-China trade tensions likely affected the sentiment of non-manufacturers via supply-chain disruptions and also possibly agriculture businesses that are included in the nonmanufacturing survey. However, strong domestic economic momentum likely offset much of the increased concerns.  

Initial jobless claims (Thursday): Low initial and continuing jobless claims remain consistent with labor market strength. However, potential business disruptions from Hurricane Florence on the southeast coast could result in temporary spikes in claims in coming weeks.

Factory orders (Thursday): Factory orders likely increased modestly during June given the 1.0% m-o-m increase in the advance durable goods report for the month. New orders and shipments of nondefense capital goods excluding aircraft, together with positive backward revisions, appear consistent with healthy growth in business equipment investment in Q2. We expect the final estimates of these indicators to reaffirm healthy momentum in business equipment investment in coming quarters. However, final inventory data will likely be consistent with softer inventory buildup at the end of Q2.  

Employment report (Friday): We expect a solid 180k gain in September nonfarm payroll employment (NFP), a slight deceleration from the 201k gain in August but a healthy reading nonetheless. We expect manufacturing employment to rebound somewhat in September with a 10k gain after a 3k decline in August. However, continued weakness in manufacturing employment could be an early indicator of trade tensions negatively impacting the US economy. Overall, incoming business employment surveys remained elevated during September while initial claims trended lower and the Conference Board reported healthy consumer sentiment with respect to job availability. In this context, we expect the unemployment rate to fall 0.1pp to 3.8%.

The key focus for September will be wage growth and whether or not the outsized 0.4% m-o-m gain in August is the beginning of a new, stronger trend. We expect average hourly earnings (AHE) to increase 0.3% m-o-m in September, consistent with a tightening labor market. However, business disruptions caused by Hurricane Florence in the Carolinas may have temporarily lowered aggregate hours during the month, adding additional upward pressure to AHE, similar to when Hurricanes Harvey and Irma made landfall in 2017. Thus, there is some additional uncertainty around our September AHE forecast.  

Trade balance (Friday): Advanced trade data for August showed continued weakness in goods exports while imports increased steadily, widening the goods trade deficit during the month to $75.8bn. With expected trend-like increases in service imports and exports, we expect the trade deficit in August to widen to $52.6bn from $50.1bn in July.

Consumer credit (Friday): Consumer credit rose $16.6bn to $3.92tn in July. Both revolving and nonrevolving credit rose at healthy paces and appears consistent with strong consumer spending growth in Q3. We expect another healthy report for August. Healthy consumer spending during the quarter was likely supported by the strong labor market and steady income gains.”

Euro area | Data preview

“The week ahead Euro area September final PMIs and UK September PMI data will be in focus next week.

UK PMI manufacturing survey, Sep (Mon 1 Oct): The CBI industrial trends survey reported a further fall in the orders balance in September, as well as output volumes. We have incorporated this into our forecast for the PMI’s output and new orders balances, but other component parts may prevent a fall in the headline number (such as a rise in the employment index). As a result, we expect a broadly similar reading in September to that of August (slightly up, in fact).

UK BoE household lending, Aug (Mon 1 Oct): Net consumer credit fell noticeably in July, the second time it has done so this year (recall the even sharper fall in March). Once again, based on UK finance data published this week, this measure of unsecured lending seems to have recovered in August. The numbers do, however, point to continued weakness in net mortgage lending, but a broadly similar number of mortgage approvals in August to that of July.

UK PMI services and composite surveys, Sep (Weds 3 Oct): We expect the business activity index of the PMI services survey to remain a little below its long-run average (by around a point at 54.0). While the global services index did not rise as much as the manufacturing index during last year’s stronger growth outturns, neither has it fallen as much as the global economy slows. The same pattern can be seen in the UK data.”