US next week: PCE, ISM, FOMC and NFP - Danske Bank

Next week important data is due out of the US next week, including NFP and the FOMC meeting.  According to analysts from Danske Bank, the meeting is not expected to yield much news.

Key Quotes: 

“In the US, we have a host of important data releases in the calendar, starting off with the release of PCE and PCE core inflation for September on Monday. Headline CPI rose quite strongly in September due in large part to a strong boost from energy following rising fuel prices and effects from the hurricanes. However, there was almost no increase in core CPI. Hence, we expect PCE core to come in at 0.1% m/m in September (unchanged at 1.3%) and headline PCE at 0.3% m/m (1.6% y/y against 1.4% in August). Note that very soon we are due the first estimate of US GDP growth in Q3 including (implicitly) an estimate of PCE in October, so this forecast may already be outdated.”

“We still think ISM manufacturing (due on Wednesday) is a bit too high and hence look for a decrease to 59.0. Although PMI manufacturing for October has been released, PMI and ISM seemed to have decoupled recently and therefore we do not put much weight on PMI to predict ISM.”

“Wednesday is also the day of the FOMC meeting. It is one of the small meetings and we do not expect any major news coming out of the meeting.”

“Finally, Friday brings the labour market report for October. Employment growth was negative in September due to hurricanes, but we would not be surprised by an upward revision, as some businesses may have reported their payroll information late. We expect employment growth in October to be significantly stronger than underlying trend growth due to catch-up effects from September. We estimate employment growth was 300,000 in October, but note that uncertainty is still high as it is not certain that businesses in the affected areas are running on all engines yet. We believe the fall in the unemployment rate was a bit overdone and therefore expect some reversal back to 4.3% against 4.2% in September. Finally, the very strong wage growth of 0.5% m/m in September is partly due to compositional effects, as the ‘leisure and hospitality’ sector (typically low wage growth jobs) was the sector most severely hit by the hurricanes. This could potentially have added up to 0.1pp to wage growth and we expect this effect was reversed in October. Hence, we expect wage growth to be 0.1% m/m in October.”