The job market will dominate economic news in the U.S. next week, with the latest figures on ADP private payrolls, initial jobless claims, productivity, and nonfarm payrolls all to be released.
It doesn’t look as though job growth has broken out of the range that has seen payrolls rise by 180,000 per month in each of the six months to January. Initial jobless claims have been more or less stable throughout February and other survey measures of both firing and hiring point to little change.
Economists are looking for a trendlike 160,000-job gain in payrolls on Friday, as this is a pre-sequester release. Although it is too early for federal spending cuts to have an effect on the job market, the projected gains are still not enough to put a dent in the unemployment rate, which is expected to remain unchanged at 7.9 percent in February.
Markets will continue to watch political developments in Italy this week for any signs that the ill-assorted parties and coalitions are close to forming a government.
On Monday, euro-zone finance ministers will discuss a possible bailout for Cyprus. The new government’s openness to austerity and reform has increased the likelihood of a bailout, but there is still disagreement over whether private bank depositors should take a hit. “With the government set to run out of money in May, the clock is ticking,” Jennifer McKeown, senior Europe economist at Capital Economics, said in a note to clients.
Otherwise, the key event will be the European Central Bank’s policy meeting on Thursday. The renewed deterioration in some indicators of economic activity, falling inflation, and fears about Italy should prompt ECB President Mario Draghi to strike a softer tone at the press conference. He might even hint at a possible future interest-rate cut or more support for struggling banks, McKeown said.
Also on Thursday, the Bank of England is expected to hold fire on more quantitative easing, or QE, partly because the recent sharp weakening of the pound is stimulative in and of itself.
Furthermore, there is a danger that carrying out more QE while the sterling is already under serious downward pressure could cause the pound to fall too far too fast, which could be destabilizing and perhaps overstoke inflation risks, according to Howard Archer, the chief U.K. and euro-zone economist for IHS Global Insight.
Still, with economic activity likely to remain fragile and limited, Archer indicated he believes the Bank of England will decide to give the economy a further helping hand with some more QE -- if not next Thursday, then soon after.
The two-day meeting of the Bank of Japan’s policy board, which also concludes on Thursday, will be overshadowed by the imminent departure of Gov. Masaaki Shirakawa and his two deputies.
“The current Board will probably be happy to sit on the sidelines until the new team is in place, and we do not expect any further policy changes until April,” Julian Jessop at Capital Economics wrote in a research note.
Yet, the yen’s depreciation and the rise in stocks have been driven by expectations, and for these trends to continue, actual monetary policy action backing up these expectations is needed. In this sense, the April 3-4 policy meeting, the first under the new BOJ leadership, is likely to be very important, according to Merrill Lynch Japan Securities economist Masayuki Kichikawa.
Elsewhere, Australia, Indonesia, and Malaysia all have interest-rate meetings next week. Rates are likely to be kept on hold in all three countries.
In China, the 12th National People’s Congress, or NPC, meeting will convene on March 5 and probably last for 10 days. Because it will be the first meeting of China’s top legislative body since the ascension of the country's new generation of leaders, the markets should be keeping a close watch. The government is likely to set the 2013 target for growth in gross domestic product at 7.5 percent and the target for inflation at 4 percent, the same as last year.
Below are entries on the economic calendar March 4-8. All listed times are EST.
8 a.m. -- Federal Reserve Vice Chair Janet Yellen (a Federal Open Market Committee voter) speaks on "Challenges Confronting Monetary Policy" before the 2013 National Association for Business Economics Economic Policy Conference in Washington.
9:45 a.m. -- The ISM New York manufacturing index for February.
1:45 p.m. -- Federal Reserve Board Gov. Jerome Powell (an FOMC voter) speaks on "Progress Toward Ending Too-Big-To-Fail" before the Institute of International Bankers Annual Washington Conference in Washington.
Russia -- Overnight deposit rate and overnight repo rate.
Euro zone -- Eurogroup meeting in Brussels.
Euro zone -- January PPI.
10 a.m. -- Economists look for a print of 55.0 in the February nonmanufacturing ISM, which would be little changed from the January print of 55.2. Service-sector activity has been expanding faster than manufacturing activity in recent months, a trend economists expect to continue in February.
2 p.m. -- Federal Reserve Bank of Richmond President Jeffrey Lacker (an FOMC nonvoter this year) participates in discussion, "Help or Harm: Central Bank Monetary Policies at the Outer Limits" before the 2013 National Association for Business Economics Economic Policy Conference in Washington.
Portugal -- Troika officials meet parliament members to discuss Portugal's seventh external aid review.
Australia -- RBA cash rate.
European Union -- The Economic and Financial Affairs Council, or Ecofin, meeting in Brussels.
Euro zone -- Final services PMI index for February.
Euro zone -- Final composite PMI index for February.
7 a.m. -- The Mortgage Bankers Association's, or MBA's, mortgage-applications indexes for the week ended March 1.
8:15 a.m. -- The ADP measure of private payrolls probably increased by 169,000 in February, after a gain of 192,000 in January. ADP overshot the Bureau of Labor Statistics’ payrolls by close to 30,000 jobs in January. Economists expect the gap to narrow this month.
8:15 a.m. -- Federal Reserve Bank of Philadelphia President Charles Plosser (an FOMC nonvoter this year) speaks on the economic outlook before the 2013 Economic Development Company of Lancaster County Annual Meeting in Pennsylvania.
10 a.m. -- Factory orders likely declined by 2.2 percent in January, with a modest gain in non-durable orders partly offsetting a sharp drop in durable orders (as reported in the preliminary release).
2 p.m. -- Federal Reserve releases the Beige Book summary of economic condition.
8:30 p.m. -- Federal Reserve Bank of Dallas President Richard Fisher (an FOMC nonvoter this year) speaks before the World Affairs Council of San Antonio 2013 International Citizen of the Year Award Dinner in Texas.
Brazil -- Selic overnight rate.
Poland -- Repo rate.
Canada -- Interest-rate announcement.
Euro zone -- 4Q GDP, final reading.
Australia -- 4Q GDP.
8:30 a.m. -- Economists see initial jobless claims picking up to 355,000 in the week ending March 2, up from 344,000 in the prior week. If the consensus forecast proves correct, the four-week moving average would fall to 351,750 from 355,000. However, the sequester will likely weigh on jobless claims in future reports.
8:30 a.m. -- After the massive decline in the monthly trade deficit to a three-year low of $38.5 billion in December, from $48.6 billion the month before, economists anticipate a modest rebound to $43.0 billion in January. Exports likely declined slightly, while imports improved. In December, much of the narrowing owed to record petroleum exports, which led to the smallest petroleum deficit since August 2009.
8:30 a.m. -- In line with the upward revision to Q4 GDP (to 0.1 percent from -0.1 percent), economists expect productivity growth to be revised up to -1.6 percent from -2.0 percent. The flip side of this is likely to be a downward revision to unit labor cost growth, to 4.3 percent from 4.5 percent.
10 a.m. -- Federal Reserve Board Gov. Jerome Powell (an FOMC voter) testifies before a Senate Banking Committee hearing, "Patterns of Abuse: Assessing Bank Secrecy Act Compliance and Enforcement," in Washington.
12 p.m. -- Federal Reserve releases quarterly Flow of Funds Accounts of the U.S.
3 p.m. -- Economists look for an expansion of $14.3 billion in consumer credit outstanding for January, following an expansion of $14.6 billion in the prior month.
Japan -- BoJ target rate.
Indonesia -- Bank Indonesia reference rate.
Malaysia -- Overnight rate.
U.K. -- BoE bank rate decision and asset purchase decision.
Euro zone -- ECB interest rate announcement and press conference.
Euro zone -- ECB Executive Board Member Joerg Asmussen speaks on "crisis and no end, or light at the end of the tunnel" in Germany.
Peru -- Reference rate.
Germany -- Factory orders for January.
Japan -- Q4 GDP, final reading.
8:30 a.m. -- The employment report is likely to show another month of modest job gains in February. Economists forecast nonfarm payrolls to increase 160,000, nearly matching the six-month average of 177,000. The unemployment rate is anticipated to hold at 7.9 percent. In addition, average hourly earnings probably rose by 0.2 percent and hours worked likely held steady at 34.4 hours.
10 a.m. -- Economists have penciled in a 0.3 percent rise for January wholesale inventories, after a decline of 0.1 percent in December.
Poland -- Inflation report.
Euro zone -- ECB Executive Board Member Peter Praet speaks on banking crises and financial stability in Brussels.
Euro zone -- ECB Executive Board Member Peter Praet speaks on "Central banking in times of crisis" in Brussels.
Mexico -- Overnight rate.
China -- February imports and exports.
Germany -- January industrial production.
Sources: Central banks, European Commission, Reuters, Market News, Capital Economics, Barclays, Bank of America Merrill Lynch, Nomura, Societe Generale.