Economic Indicators: Manufacturing is Key

Ford assembly line, 1913.

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Click this link for the full economic calendar for the week of October 3rd:

  • Monday:  ISM Mfg Index and Construction Spending
  • Tuesday:  Motor Vehicles Sales and Factory Orders
  • Wednesday:  ADP Employment Report and ISM Non-Mfg Index 
  • Thursday:  Initial Jobless Claims
  • Friday:  Employment Situation, Wholesale Trade, and Consumer Credit

ISM Manufacturing and Non-Manufacturing data which are indicators of business conditions, including employment trends, prices, new orders and production will be widely examined this week says Peter Costa, Trader and President of Empire Executions, and CNBC Market Analyst. He will also be watching construction spending, factory orders, wholesale trade, and consumer credit. 

Costa anticipates manufacturing activity will pick up slightly.which will likely set a slightly better tone for the equity markets leading up and into the holiday season. He expects both high-end and low-end retailers to continue to do well this year and for discount retailers like Wal-Mart Stores to remain flat through the shopping season. 

Costa adds that the domestic housing market has weighed heavily on the economy. Indeed, the housing market is a long way from recovering and is a huge burden on the economy. Costa expects to see signs of recovery sometime in 2013, when excess inventory is worked out of the system (this is also up in the air because of the foreclosure mess). The number of foreclosures and existing homes on the market has put added pressure on new home sales. While Costa believes most home owners who are under water on their mortgage want to pay off their loans, they don’t have the income. Another upcoming issue for housing:  as baby boomers start to put their homes up for sale, they could inundate a market already glutted with available homes. 

Costa will be watching the jobless claims data later in the week to see if the number remains below the 400,000 mark, which will be a good sign. If businesses stars to see this number improve, it will encourage investment and more hiring. Costa adds auto sales are also a growth indicator; people are looking for automakers like GM, Ford, and Chrysler to ramp up production, as sales have been improving. He anticipates the auto industry will start expanding, and start hiring again. The jobs data on Friday will be closely monitored, as it has been very erratic lately.  Costa said the private sector has to create more jobs to lower the unemployment rate.

Also on tap: Federal Reserve Chairman Ben Bernanke and a few FOMC member will be on the speaking circuit.

On the European debt crisis, Costa said the passage of the vote to expand funding by German politicians will help calm the market and he expects to see a reduction in volatility.

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