The U.S economy is set for an intense week of fundamentals with labor sector data including the much anticipated Non-Farm Payrolls report on Friday, which will have a direct influence on the Fed’s decisions for the upcoming period, whether it will conduct more stimulus measures.
Investors will keep close tabs on the U.S. markets this week on Congress negotiations over the fiscal cliff, if the Democrats and Republicans will reach an agreement to avoid the automatic tax hikes and spending cuts of 600 billion at the beginning of 2013.
This week’s data will reflect the economic performance during the recent period, after last week’s positive data of the U.S. economy’s second reading of GDP for the third quarter which was revised higher to 2.7% from the prior reading of 2.0%.
The U.S. jobs report reflects a clear image of the U.S economy’s performance, in particular the labor sector as one of the main fundamentals the Fed takes in consideration when making their decisions. The Fed promised to conduct more stimulus measures in case the data shows negative results and clearly we might see the impact of Hurricane Sandy take a toll on the sector.
November’s Job report is expected to show the on-going weak results in the labor sector, as the Change in Non-Farm Payrolls reports is estimated to add only 90 thousand jobs, compared to October’s 171 thousand.
As for the Change in Private Payrolls, it is expected to add 100 thousand jobs, after the prior month recorded 184 thousand, whereas the Manufacturing Payrolls are expected to drop 7 thousand jobs after adding 13 thousand jobs in October.
The ADP report for the change in private sector employment will be released; the ADP survey expects the private sector to add 140 thousand jobs, after the previous month reading of 158 thousand. The ADP report is anticipated by economists, as it is considered an outlook for the U.S. Bureau of Labor Statistics jobs report on Friday.
The upcoming week brings more U.S. data, as the Institute for Supply and Management will release its composite index for November and is expected to confirm the sluggish economic performance.
The ISM Manufacturing Index is estimated to drop to 51.4 from 51.7, whereas their Non-Manufacturing index is also expected a fall to 53.7 after 54.2 in October.
The University of Michigan Confidence concludes the week’s data with the release of its preliminary reading for December, and is estimated to show a decline to 82.0 from 82.7.
The unemployment rate for last month rose to 7.9 percent, compared with the prior reading of 7.8 percent, which is unlikely to change in this week’s report.
The fiscal cliff remains the primary concern, due to its consequences on the U.S. economy which is recession, as growth will be comprised from massive tax increases and government spending cuts.
The jobs report is highly waited, and is expected to establish the weak conditions of the U.S economy, and might cause the Fed to consider another round of quantative easing to pave the economy’s path to recovery.