Between a "maintain the status quo" Federal Reserve announcement and a less-than-impressive July jobs report, last week was a bit of an all-you-can-eat buffet of economic news. And that's to say nothing about the emergence of former Treasury Secretary Larry Summers as a contender to become the next Federal Reserve chairman. The question who succeeds Ben Bernanke at the Fed has become one of the more interesting discussions crisscrossing the political and economic worlds.
This week, no more buffet line. We go on a data diet.
New reports are in relatively short supply this week. They include:
- The Institute for Supply Management reports on the service sector for July, Monday at 10 a.m. (all times Eastern).
- The Commerce Department reports on the June trade imbalance, Tuesday at 8:30 a.m.
- The Federal Reserve reports on consumer credit for June, Wednesday at 3 p.m.
- The Labor Department reports on new weekly claims for unemployment benefits, Thursday at 8:30 a.m.
Last week, the ISM's reading on the manufacturing sector was a real head-turner. A gauge of factory output was the strongest since 2004 and the employment component also surged. We know that the housing sector is doing well and that some auto manufacturers are seeing double-digit monthly sales gains, compared to a year earlier. Manufacturing jobs, however, were little changed in July and even over the past year.
The service sector of the economy "is doing better," says Paul Edelstein, an economist at IHS Global Insight. He notes that it includes energy, "which is another booming sector." He looks for a rise in the ISM services index, which would point to accelerated growth.
Trade could use a boost
John Canally, chief economist for LPL Financial, says he'll be looking at the June trade report for signs how overseas economies are faring. "Our exports have been relatively flat," Canally says, adding, "That's one of the reasons the economy isn't growing as fast as it should be." Perhaps giving some hope for the outlook, Europe appears to be rebounding and China is seeing relatively weak growth.
While economic growth has been less than 2 percent for three consecutive quarters, a number of experts remain hopeful for acceleration. Says Scott Anderson, chief economist with Bank of the West, "Despite the disappointing read July nonfarm payrolls and first-half real (gross domestic product), we are still convinced of a stronger second half for the U.S. economy."
Others argue that the full impact of mandatory federal budget cuts has yet to be felt, continuing to produce headwinds for the U.S. economy.
This week in business history: Mr. Nestle's birthday
On Aug. 10, 1814, German businessman Henri Nestle was born. He founded the company which was the predecessor of the firm that now bears his name. It has become the world's largest food and beverage company, headquartered in Switzerland. Nestle himself was trained in a pharmacy and developed an early version of infant formula. The product filled a need wanted in part because of a high rate of infant mortality at the time. It makes products under a variety of brand names including Lean Cuisine, Haagen-Dazs ice cream, Stouffer's and Nestea.
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