Key Events This Holiday-Shortened Week: Jobs, Warsh In Sintra, ISM, ADP

Global attention this holiday-shortened week,will center on the US labor market, with the June employment report due on Thursday ahead of the Independence Day holiday. A reminder that the US will be 250 years old this week. Alongside that, central bank communication will be in focus at the ECB’s Sintra forum (today through Wednesday), while inflation data across Europe and activity indicators in Asia—notably China’s PMIs and Japan’s monthly data—round out a busy global calendar.

In the US, DB economists expect payroll growth on Thursday to slow to +75k (from +172k previously), with private payrolls rising by around +90k. There is some risk of seasonals pulling down the numbers as they have in recent years around this time. The unemployment rate is expected to hold at 4.3%, while average hourly earnings are seen unchanged at +0.3% month-on-month. Hours worked are also expected to remain steady at 34.3, leaving nominal income growth broadly stable.

Ahead of that, today brings the Dallas Fed manufacturing survey, while tomorrow sees the May JOLTS report, where markets will watch for any shifts in hiring, quits and layoffs amid a still subdued hiring environment. Wednesday then features the ADP employment report alongside the ISM manufacturing index (forecast 53.9 vs 54.0 previously). These releases should help set expectations going into Thursday’s payrolls. Beyond the labor market, tomorrow also sees the Conference Board’s consumer confidence index (economists expect 94.4 vs 93.1 previously).

On policy, attention will turn to Wednesday, when Fed Chair Warsh speaks at the ECB’s Sintra forum. DB economists continue to expect a relatively hawkish policy path, with two rate hikes pencilled in later this year. However, near-term guidance is likely to remain limited, leaving markets to take their cues primarily from incoming data.

Looking beyond the US, Europe’s main event is the aforementioned ECB’s annual Sintra conference, which begins today and runs through Wednesday, featuring remarks from major central bank leaders. In parallel, inflation data will be a key focus, with Spain and Belgium reporting today, followed by Germany, France and Italy tomorrow, and the Eurozone aggregate on Wednesday. DB economists expect inflation of 2.46% YoY in Germany, 2.30% in France, 3.23% in Italy, and 2.95% for the Eurozone. Switzerland will also release CPI on Thursday. In the UK, the BoE publishes its credit conditions surveys on Thursday and the DMP survey on Friday.

In Asia, China releases various PMIs in the first half of the week. In Japan, today’s retail sales (out earlier) is followed by industrial production tomorrow, where economists expect a +1.4% month-on-month increase. The highlight, however, will be the Bank of Japan’s Tankan survey on Wednesday, which is expected to show broadly steady sentiment and may reinforce the case for further gradual policy tightening.

Courtesy of DB, here is a day by day calendar of events

Monday June 29

• Data: US June Dallas Fed manufacturing activity, UK May net consumer credit, M4, Japan May retail sales, Eurozone May M3, June economic confidence
• Central banks: ECB forum on central banking in Sintra (through July 1), ECB’s Lagarde speaks, BoE’s Pill speaks
• Earnings: Prosus, AeroVironment

Tuesday June 30

• Data: US June Conference Board consumer confidence index, MNI Chicago PMI, Dallas Fed services activity, May JOLTS report, April FHFA house price index, China June official PMIs, UK June Lloyds Business Barometer, Q1 current account balance, Japan May jobless rate, job-to-applicant ratio, industrial production, housing starts, Germany June CPI, unemployment claims rate, May retail sales, import price index, France June CPI, May PPI, consumer spending, Italy June CPI, May PPI, Canada April GDP
• Central banks: ECB’s Vujcic, Elderson, Schnabel, Cipollone and Lane speak, BoE’s Breeden speaks
• Earnings: Nike

Wednesday July 1

• Data: US June ISM index, ADP report, May construction spending, China June RatingDog manufacturing PMI, Japan Q2 BoJ’s quarterly Tankan survey, June consumer confidence index, Italy June new car registrations, budget balance, Q1 deficit to GDP, Eurozone June CPI
• Central banks: Fed’s Warsh speaks, ECB’s Lagarde, Vujcic, Cipollone and Lane speak, BoE’s Bailey speaks, BoC’s Macklem speaks
• Earnings: General Mills
• Other: Ireland takes on the rotating presidency of the Council of the EU

Thursday July 2

• Data: US June jobs report, May factory orders, initial jobless claims, Japan June monetary base, France May budget balance, Italy May unemployment rate, Eurozone May unemployment rate, Canada June manufacturing PMI, Switzerland June CPI
• Central banks: ECB’s Cipollone speaks, BoE’s Mann speaks, BoE’s Q2 bank liabilities, credit conditions surveys
• Other: US bond markets close early

Friday July 3

• Data: China June RatingDog services PMI, UK June official reserves changes, France May industrial production, Italy May retail sales
• Central banks: ECB’s Lagarde, Nagel and Makhlouf speak, BoE’s Bailey speaks, BoE’s June DMP survey
• Other: US Independence Day holiday (all markets closed)

Finally, looking at just the US, Goldman writes that the key economic data release this week is the employment report on Thursday. Fed Chairman Kevin Warsh is expected to speak at the ECB Forum in Sintra, Portugal on Wednesday. 

Monday, June 29 

• There are no major economic data releases scheduled. 

Tuesday, June 30 

• 09:00 AM FHFA house price index, April (consensus +0.2%, last +0.1%)
• 09:00 AM Case-Shiller home price index, April (GS -0.1%, consensus -0.1%, last -0.2%)
• 10:00 AM Conference Board consumer confidence, June (GS 95.5, consensus 94.6, last 93.1)
• 10:00 AM JOLTS job openings, May (GS 7,100k, consensus 7,288k, last 7,618k): We estimate that JOLTS job openings declined to 7.1mn in May based on the signal from online measures of job postings from Indeed and LinkUp.

Wednesday, July 1 

• 08:15 AM ADP employment change, June (GS +120k, consensus +119k, last +122k)
• 09:00 AM Fed Chairman Warsh speaks: Fed Chairman Kevin Warsh will participate in a panel discussion with the President of European Central Bank Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem at the ECB Forum on Central Banking in Sintra, Portugal. A moderated Q&A is expected. The event will be livestreamed. In his press conference following the June FOMC meeting, Chairman Warsh said, “The Committee thought that the labor markets were stable. There were some people around the Committee who thought that it was trending better than that, [and] trends matter more than data points.” He also reiterated language from the post-meeting statement, saying, “Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy… but to be clear, the Fed will deliver price stability.”
• 09:45 AM S&P Global US manufacturing PMI, June final (consensus 55.7, last 55.7)
• 10:00 AM ISM manufacturing index, June (GS 54.0, consensus 53.9, last 54.0): We estimate that the ISM manufacturing index was unchanged at 54.0 in June, reflecting a slight decline in regional manufacturing surveys—our manufacturing survey tracker declined by 0.6pt to 54.4 in June—that is offset by a tailwind from residual seasonality.
• 10:00 AM Construction spending, May (GS +0.2%, consensus +0.2%, last +0.4%)
• 05:00 PM Lightweight motor vehicle sales, June (GS 16.1mn, consensus 16.1mn, last 16.1mn)

Thursday, July 2 

• 08:30 AM Nonfarm payroll employment, June (GS +130k, consensus +115k, last +172k); Private payroll employment, June (GS +95k, consensus +118k, last +120k); Average hourly earnings (MoM), June (GS +0.2%, consensus +0.3%, last +0.3%); Unemployment rate, June (GS 4.3%, consensus 4.3%, last 4.3%): We estimate nonfarm payrolls increased 130k in June. On the positive side, we estimate that the World Cup could boost payroll growth by 40k in June. Additionally, June payrolls have exhibited a consistent positive bias in initial prints over the last decade. The bias has become particularly pronounced in state and local government educational services payrolls: over the last three years, the category has been revised down by an average of 45k between the first and third releases. On the negative side, we expect a 10k decline in government payrolls outside of state and local government educational  services. We estimate average hourly earnings rose 0.2% month-over-month in June, reflecting negative calendar effects. We estimate that the unemployment rate was unchanged on a rounded basis at 4.3% in June, reflecting the stabilization in continuing claims.
• 08:30 AM Initial jobless claims, week ended June 27 (GS 215k, consensus 220k, last 215k): Continuing jobless claims, week ended June 20 (consensus 1,813k, last 1,821k)
• 10:00 AM Factory orders, May (GS -1.7%, consensus -2.0%, last +4.8%)

Friday, July 3 

• US Independence Day holiday observed. There are no major economic data releases scheduled. NYSE will be closed, SIFMA recommends bond markets remain closed.

Source: DB, Goldman