THE BOTTOM LINE
Economic indicators were abundant this week - at least one report a day - plus the FOMC met on Tuesday and Wednesday of this week. Nevertheless, the economic reports were pretty much consistent in their mediocrity. The NAPM-Chicago index, which covers January 2003, actually showed improvement perhaps suggesting a turnaround in manufacturing. Nevertheless, investors were not so much concerned on economic issues as political issues. The President's war drums against Iraq were sounded daily by various administration officials. Uncertainty is a problem these days. How can investors make any rational decisions?
Looking Ahead: Week of February 3 to February 7
Market News International surveys between 15 and 20 Wall Street economists each week for their forecasts of economic indicators.
Monday
The ISM manufacturing index is predicted to edge down to 54 in January from a level of 55.2 in December. (The historical data for the ISM index was revised this past week with annual seasonal adjustment revisions.) The NAPM-Chicago business barometer jumped in January, but was recovering partly from a weak December figure. Even with a slight dip in the index, any level above 50 suggests an expanding manufacturing sector. (Forecast range: 51.5 to 56)
The market consensus shows that construction spending will post a 0.5 percent rise for the month of December after edging up 0.3 percent in November. Nonresidential construction is weaker than the residential sector, but declines are slowing down. (Forecast range: 0.0 to 0.6 percent)
Economists are predicting that motor vehicle sales will drop sharply in January from December levels. Auto sales are predicted to run at a 5.7 million-unit rate in January, down from a 6.2 million-unit rate in December. (Forecast range: 5.2 to 5.9 million-unit rate) Light truck sales are estimated to have sold at a 7.5 million-unit rate in January, down from an 8.7 million-unit rate in December. (Forecast range: 6.8 to 7.8 million-unit rate)
Tuesday
Factory orders are expected to inch up 0.3 percent in December after declining 0.8 percent in November. This incorporates the anemic pace of advance durable goods orders for the month. (Forecast range: 0.0 to 1.0 percent)
Wednesday
The market consensus shows that the ISM non-manufacturing index should edge up a tick or two to 55 in January from December's level of 54.7. This index has consistently run stronger than the manufacturing index this past year. (Forecast range: 53 to 56)
Thursday
Economists are predicting that new jobless claims will decrease 12,000 to 385,000 in the week ended February 1 from last week's level of 397,000. Changes in jobless claims are typically more volatile in the fall and winter because of a variety of holidays; it becomes more difficult to adjust the data for seasonal variation. (Forecast range: -27,000 to -4,000)
The market consensus shows that nonfarm productivity is expected to increase at a 0.5 percent rate in the fourth quarter. This stems from the anemic pace of GDP growth as well as the sluggish employment situation. Nonfarm productivity grew at a more robust 5.1 percent rate in the third quarter (Forecast range: -1.0 to 1.0 percent) At the same time, unit labor costs are expected to rise at a 3.5 percent rate in the fourth quarter. Unit labor costs decreased at a 0.2 percent rate in the previous quarter. (Forecast range: 2.3 to 4.9 percent)
Friday
The market consensus shows that nonfarm payroll employment should post a gain of 60,000 in January after declining 101,000 in December. Keep in mind that odd seasonal problems could boost payrolls in construction and retail trade. (Forecast range: 0 to 110,000) Manufacturing remains in the dumps as factory payrolls are expected to drop 45,000 in January after plunging 65,000 in December. (Forecast range: -15,000 to -59,000) The civilian unemployment rate is predicted to remain unchanged at 6 percent in January. (Forecast range: 5.9 to 6.1 percent)
Economists are predicting that average hourly earnings will rise 0.3 percent in January, roughly in line with the trend of the past several months. The average workweek is predicted to edge up 6 minutes to 34.2 in January from 34.1 in December.
Consumer installment credit is predicted to rise $3 billion in December after declining $2.2 billion in November. Remember that motor vehicle sales jumped in the final month of the year - and this could boost credit usage. (Forecast range: $0.2 to $6.0 billion) |
