The government shutdown this week stole the monthly U.S. jobs report, along with several others. More economic data releases scheduled for next week will not see the light of day if the shutdown is still in effect, including August's international trade figures and September's retail sales.
With government economic data releases suspended until after the shutdown ends, economists are relying on whatever data the private sector or the Federal Reserve, which is still open, are publishing.
“The ongoing government shutdown has disrupted the normal data flow. We, along with the markets and the Fed, are flying blind when it comes to tracking the economy,” said Joshua Dennerlein, an economist at Bank of America in New York, in a note.
The majority of indicators that would have been released in the next few weeks feed directly into economists GDP tracking model, which they won’t be able to update until the shutdown ends.
What concerns economists more is that, rather than just delaying the release of September's data, an extended shutdown lasting a couple of weeks or longer could mean October's data simply isn't collected and can't be published at all.
“At the very least the quality of October's data releases will be questionable,” said Capital Economics' Paul Ashworth.
He explains it in more details:
Take the non-farm payroll employment figures as an example. They are based on a survey of establishments that covers the pay period including the 12th of the month. Presumably that survey won't be conducted if the shutdown lasts much beyond mid-October. It is possible that the survey could be conducted later in the month, but that could delay the release in early November and might damage the quality of the data. Even if asked to base their response on those employed around the 12th, some of the firms surveyed might still record their current tally.
A two week difference may not sound like a lot, but it could have a significant impact on the tally of retail employment, which will increase sharply as we go through October, thereby getting closer to Halloween and beyond that the early Holiday shopping season. The proximity of Halloween could also wreck the retail sales figures if they are collected later in October. Elsewhere, the consumer price data is supposedly based on prices collected through the month, but the shutdown means that may not be possible. For most goods and services, prices don't change quickly enough to make that a problem, but some items like gasoline prices do.
The delay of September's data releases and the questionable quality of October's data make it less likely that the Fed will opt to slow the pace of its monthly asset purchases anytime soon.
"It is going to be much harder to get a gauge of what's happening with the economy" if the government stays shut, Boston Fed President Eric Rosengren said this week in a speech in Burlington, Vermont. "We will have data from the private sector," he said, "but if we don't have good, reliable government statistics it will make it much harder to be able to take a gauge of what's going on."
The government shutdown and the stand-off in Congress could also delay President Barack Obama's nomination of the next Fed Chair, which is now widely assumed to be the current Vice-Chair Janet Yellen.
Assuming the shutdown is still in effect, the minutes from the mid-September federal open market committee meeting will probably garner most market attention next week.
At its September meeting, the FOMC surprised markets by not tapering the pace of its asset purchases. The minutes from that meeting may give more insight into why policymakers chose not to taper. Barclays expect the reasons to include softer job growth, the downgrade of the FOMC’s real gross domestic product forecast, higher mortgage rates, and the upcoming fiscal deadlines.
Economists will also be looking closely at the committee’s discussion of the unemployment rate. Chairman Ben Bernanke had highlighted it as a key driver of tapering in June but backed away from that view in September, and any insight into that change in view will be significant. More importantly, they’ll be paying close attention to see if there was any discussion of the criteria that the committee will use to decide whether to taper at upcoming meetings.
The euro zone's labor market appears to have stabilized, official figures indicated this week. The region’s jobless rate was steady at 12 percent in August as total unemployed fell for third month in a row. That's the first time the region has enjoyed such a run since April 2011. There will be a few major euro zone data releases this week. Economists have penciled in small rises in German and French industrial production in August.
This week, Japan’s Prime Minister Shinzo Abe pledged to press ahead with the first increase in sales tax for over 15 years as part of efforts to restore confidence in the long-run health of Japan’s public finances.
Next week is a rather quiet week for economic data in Japan. Two reports to keep an eye on are the Economy Watchers Survey on Tuesday and the machinery orders for August on Thursday.
In the U.K., the Monetary Policy Committee (MPC) meeting on Thursday takes center stage, although it is likely to pass without event, according to Vicky Redwood, chief U.K. economist at Capital Economics. Meanwhile, Wednesday sees the release of the Bank of England’s Credit Conditions Survey, as well as August’s industrial production and trade figures.
The marginal improvement in China’s September PMIs suggests export orders and domestic demand will grow at a more modest pace than in August. Economists expect new loans disbursed to fall slightly as liquidity returns to other channels of financing. The momentum in the third-quarter economic rebound is also waning.
Elsewhere, there will be policy rate decisions in Korea and Indonesia. Both central banks are expected to keep rates on hold. Singapore is scheduled to publish its first estimate of third-quarter GDP
Below are entries on the economic calendar Oct. 7 - Oct. 11. All listed times are EDT.
Note: Asterisks indicate releases from agencies directly affected by the government shutdown, which are not expect to come out on schedule should the shutdown persist.
3 p.m. – After a rise of $10.4 billion in July, economists look for consumer credit to expand by $11.5 billion in August. This would be the fourth consecutive double-digit monthly gain and, as has been the case in the past several years, the major driver is expected to be growth in non-revolving credit, specifically federal student loans.
Luxembourg -- Parliament dissolved.
E17 -- European Central Bank executive board member Joerg Asmussen speaks on "Markets in Transition" in Germany.
E17 -- ECB Executive Board member Peter Praet speaks on Japanese economy in Brussels.
*8:30 a.m. -- Economists anticipate that a rebound in the cost of imported oil caused the monthly trade deficit to widen further to $39.4 billion in August, compared to $39.15 billion in the prior month.
12:25 p.m. -- Federal Reserve Bank of Cleveland President Sandra Pianalto (a nonvoter on the FOMC this year) speaks on the economy and monetary policy before the Economic Club of Pittsburgh/CFA Society Pittsburgh Luncheon in Pennsylvania.
12:30 p.m. -- Federal Reserve Bank of Philadelphia President Charles Plosser (a nonvoter on the FOMC this year) speaks on the economic outlook and monetary policy before the Johnstown Chamber of Commerce National Economic Outlook and Monetary Policy Conference in Pennsylvania.
Indonesia -- Bank Indonesia reference rate.
Singapore – Q3 GDP, advance estimate.
Germany – August factory orders.
Germany – August trade balance.
France – August trade balance.
10 a.m. -- Federal Reserve Bank of Chicago President Charles Evans (a voter on the FOMC this year) participates in International Monetary Fund panel, "Unconventional Monetary Policies and their Cross-Country Spillovers," in Washington.
*10 a.m. – Wholesale inventories probably rose by 0.3 percent in August, following a 0.1 percent increase in July.
2 p.m. – Minutes of Sept. 17-18 FOMC meeting released.
Brazil – Selic overnight rate.
E17 -- European Central Bank Executive Board member Benoit Coeure speaks on "Economic Consequences of Low Interest Rates" in Geneva.
E17 -- European Central Bank President Mario Draghi speaks at Harvard Kennedy School in Cambridge.
Germany – August industrial production.
Japan – August core machinery orders.
8:30 a.m. -- Economists expect initial jobless claims to climb to 310,000 for the week ending Oct. 5 from 308,000 in the prior week.
*8:30 a.m. – Import prices likely remained unchanged in September. Meanwhile, export prices declined by 0.2 percent, following a 0.5 percent drop in August.
9:45 a.m. -- Federal Reserve Bank of St. Louis President James Bullard (a voter on the FOMC this year) gives opening remarks before the 38th Annual Federal Reserve Bank of St. Louis Fall Conference in Missouri.
1:45 p.m. -- Federal Reserve Board Governor Daniel Tarullo (a voter on the FOMC this year) speaks before the Bretton Woods Committee 2013 International Council Meeting in Washington.
*2 p.m. – Economists at Barclays look for the federal government to have posted a budget surplus of $100 billion, which would be a roughly $25 billion increase from the surplus of September 2012. This would result in a FY 2013 budget deficit of just over $650 billion and mark a substantial narrowing from the FY 2012 deficit of $1,089 billion.
2:30 p.m. -- Federal Reserve Bank of San Francisco President John Williams (a nonvoter on the FOMC this year) speaks before a Boise business and community leaders’ luncheon in Idaho.
6:30 p.m. -- Federal Reserve Bank of Kansas City President Esther George (a voter on the FOMC this year) gives brief remarks before an event to unveil an exhibit recognizing the role of Oklahoma Sen. Robert Owen in the founding of the Federal Reserve System in Oklahoma.
Global -- IMF/World Bank annual meeting (to Oct. 13).
G20 -- G20 meeting in Washington (to Oct. 11).
Korea -- South Korea 7-day repo rate.
UK -- BoE bank rate decision and asset purchase decision.
E17 -- ECB President Draghi speaks at Economic Club of New York.
E17 -- ECB Executive Board member Asmussen speaks on “The End of the Crisis -- Euro Vision?” in Washington.
China – September foreign reserves, new loans and M2 money growth.
India – September exports.
Philippines – August total exports.
France – August industrial production.
Italy – August industrial production.
Greece – September unemployment rate.
*8:30 a.m. – September’s data should provide further confirmation that there is little upward pressure in producer price inflation. Economists expect a 0.2 percent month-on-month increase in the headline PPI in September. The core PPI probably rose by 0.1 percent, consistent with a small increase in the year-over-year rate, to 1.2 percent from 1.1 percent.
*8:30 a.m. – Retail sales for September likely rose by 0.2 percent, partly reflecting a small gain in gasoline prices.
9:55 a.m. – The government shutdown likely have weighed on sentiment. Economists expect the University of Michigan’s preliminary October index of consumer sentiment to decline to 76.0 from 77.5 in the final September reading.
E17 -- ECB Executive Board members Peter Praet, Benoit Coeure and Joerg Asmussen speak at IIF in Washington.
Germany – September final HICP, CPI.
Italy – September final HICP, CPI.
Sources: Central banks, European Commission, Reuters, Market News, Capital Economics, Barclays, Bank of America Merrill Lynch.