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March 2nd, 2009

Mon, Mar 2 2009, 10:26 GMT
by BBVA Bancomer Team

BBVA Bancomer

Manufacturing ISM (Feb, Monday 10:00 ET)

F: 33.3 C: 34.0 P: 35.6

Negative readings in new durable goods orders for the second month in a row show that manufacturing activity remains weak. This trend is largely influenced by a hold on production in the auto sector, whereby weak demand has driven manufacturers to reduce activity and close plants. We expect the ISM Manufacturing Productivity Index to remain low at 33.3, well below its break even point at 50, indicating further contraction in nonresidential investment and manufacturing activity.

Personal Income & Outlays (Jan, Monday 8:30 ET)

F: -0.2%, 0.3% C: -0.3%, 0.3% P: -0.2%, -1.0%

Due to weakness in the labor market and the increasing number of continuing job claims, overall wages and fringe benefits have decreased. As a result, we expect personal income to further decline by -0.2% in January. In addition, we expect personal consumption to increase by 0.3%, driven by the rise in January retail sales that was stimulated by the huge discounts offered to consumers. Looking forward, however, we expect real personal consumption to remain weak for several more months. Finally, we expect the core PCE to increase by 0.1%, after not changing since November. However, these positive results are only transitory due to an increase in the price of shelter and automobiles in January.

Non-Manufacturing ISM (Feb, Wednesday 10:00 ET)

F: 42.4 C: 41.3 P: 42.9

The fact that companies are continuing to lay-off employees and people are spending more time out of work indicates economic activity across most industries remains weak. As a result, we expect the Non-Manufacturing ISM to remain at a low level of 42.4 for the month of February. This will be the fifth month in a row that the index will stand below its benchmark of 50, indicating a widespread economic contraction.

Nonfarm Payroll & Unemployment Rate (Feb, Friday, 08:30 ET)

F: -607K, 7.9% C: -618K, 7.9% P: -598K, 7.6%

We expect job losses to continue as consumer confidence decreases and demand weakens, indicating that the decline in the labor market has not yet bottomed out. Initial jobless claims came in at 667K for the week ending February 27th and the four week moving average is at 639K, the highest since October 1982. In addition, the number of continuing claims rose to 5112K, the highest since the index was established in 1967, which signifies that there is no new job creation. As a result, we expect non-farm payrolls to decrease by 607K, which will be the 13th monthly decline in a row. In addition, we expect the unemployment rate to rise to 7.9% in February from 7.6% in January. This is again due to the fact that mass layoffs continue and it is becoming more difficult to find a new job.

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Published on  Mon, Mar 2 2009, 10:31 GMT