• Home ::
• Fundamental ::
• Market View ::
• Weekly Observatory

• Send
• Print
• Add To
• Rss

Weekly Observatory

ad08e486-c2ca-4008-a945-3f68933a5f16

0

0

July 28th, 2008− August 1th, 2008

Mon, Jul 28 2008, 08:03 GMT
by Marcial Nava, Alejandro Neut

BBVA Bancomer

Consumer Confidence Index (July, Tuesday 10:00 ET)

F: 49.0     C: 50.0     P: 50.4

Increasing concerns about the economy have been stirred by rising foreclosures, increasing job losses, and high commodity prices. As a result, the Conference Board Index of Consumer Confidence probably declined further in July. We expect it to come at 49.0, the lowest reading since February 1992. Late in July, oil prices decreased notably; if this becomes a trend, the Consumer Confidence Index could bottom in the next months. 

Employment Cost Index (2Q08, Thursday 8:30 ET)

F: 0.7%     C: 0.7%     P: 0.7%

Despite rising inflationary pressures, there is no evidence of a wage spiral. On the contrary, some measures of labor compensations have moderated in recent months. This is the case of average hourly earnings, whose y-o-y growth has decelerated steadily since December 2006. In addition, sustained profits in the non-financial business sector and an intense competition have offset some of the pressures from higher commodity costs. In line with these developments, we look for a 0.7% quarterly increase in the Employment Cost Index in 2Q08 from 0.7% in the previous quarter.

Nonfarm Payroll & U Rate (July, Friday 8:30 ET)

F: -75K, 5.6%     C: -68K, 5.6%     P: -62K, 5.5%

High frequency indicators suggested that job losses continued in July. For instance, initial unemployment insurance claims have been above trend, with the 4-week-moving average at 382K in the week ending July 18. Claims have accelerated since March, reflecting weaker conditions in the labor market. July’s nonfarm payroll will primarily reflect losses in manufacturing and construction. Professional and business, and financial services are likely to shed additional jobs. On the positive side, the government is likely to add as well as private health and education services. Finally, we expect the unemployment rate to increase to 5.6% from 5.5% in June. Continuing unemployment insurance claims have moved up in recent months, suggesting that applicants spend more time (on average) without a job. In our main scenario, the labor market will deteriorated further and the unemployment rate will reach 5.7% before year-end.

Gross Domestic Product (2Q08, Thursday 8:30 ET)

F: 0.9%     C: 1.8%     P: 1.0%

According to our estimates, the U.S. economy proved resilient in the second quarter, supported by tax rebates, lower interest rates and a solid expansion of both non-residential investment and exports. We expect a 0.93% real GDP growth in 2Q08 from 0.96% in 1Q08. This is equivalent to a 1.8% year-over-year rate from 2.5% in 1Q08. For further details please see our GDP Observatory 2Q08 (July 24, 2008).

Manufacturing ISM Index (July, Thursday 8:30 ET)

F: 51.5     C: 49.1     P: 50.2

Durable goods orders rebounded in June, probably favored by a weak exchange rate and solid economic growth abroad. This anticipates better manufacturing numbers in July than in previous months. Thus, we expect the manufacturing ISM index to post a small gain of 51.5 from 50.2 in June. However, we do not expect this improvement to anticipate a rebound in the ISM index since the economy will slow down further in the next quarters.

• Download full Weekly Observatory with charts

Published on  Mon, Jul 28 2008, 08:12 GMT