WASHINGTON (MaceNews) – The coming week’s economic data measures updated consumer and business inflation readings in a context of higher interest rates and a slower rebuilding of the jobs market.
Outside of the standard data, Congress faces a midnight Friday deadline to avoid another government shutdown which, if it happens, could delay the following week’s retail sales update.
The Friday jobs report, showing only 245,000 payroll additions, disappointed with only about half the hiring expected. The unemployment rate’s tenth of a point improvement, to 6.7%, was largely an artifact of a shrinking labor force. While somewhat of an apples-to-oranges comparison, analysts said the job creation at that pace would take an interminably long time to recover the 10 million jobs lost since the pandemic began or to work down the 20 million layoffs tallied by the weekly claims data.
With an economic slowdown already evident and the feared post-Thanksgiving virus surge just getting under way, widening lockdowns and curtailments of business activity seem already assured as the death toll and hospitalizations are seen increasing further from record levels. It may be too early to tell the extent to which all the medical bad news will cut into – or eliminate – fourth quarter and first quarter growth but negative numbers are no longer unthinkable.
Backgrounding all of that is the escalation in interest rates. The Treasury 10-year jumped to a yield of 0.980% after the jobs report Friday before softening again, raising the specter of a 1.0% yield and more soon. The nexus of rates and inflation has not been lost on analysts, a few of which have begun sounding a warning of price acceleration.
None of that is expected to show up in next Thursday’s Consumer Price Index, after showing no change from September to October. Dominated by the third of the index devoted to shelter prices, the CPI’s overall moderation in October was influenced by the slim tenth of a point increase there. Shelter has seldom slipped below a monthly 0.2% in recent years and occasionally has jumped even higher.
For the year through October, the consumer inflation rate was up 1.8% while the core rate gained 1.6%.
The November Producer Price Index Friday is following an October report that was a little hotter than expected, rising 0.3%. But the rise was largely based on a rare spike in volatile food prices which may not be sustained. For a year, the index was still up only half a percent. Core business inflation, including profit margins, was up 0.2% in October, up 0.8% for 12 months.
The data lineup for the week ahead:
Monday, Dec 7: Fed’s Consumer Credit 3p ET
Tuesday, Dec 8:
NFIB optimism index 6a
3Q revised productivity 8:30a
Redbook 8:55a
Wednesday, Dec 9
MBA mortgage applications 7a
Wholesale inventories 10a
JOLTS 10a
EIA oil stocks 10:30a
Thursday, Dec 10
CPI 8:30a
Jobless claims 8:30a
Friday, Dec 11
Prelim UMich sentiment 10a
PPI 8:30a
(Deadline for congressional budget vote/govt shutdown)
Separately, Extract Analytic’s outlook for SPX sees yellow flags generated by the VIX:
—
Content may appear first for exclusively on the Mace News premium service. For real-time email delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.