MARKET TRENDS: Summary for the Week Beginning June 29, 2015

Apart from the deal to prevent Greece from defaulting on its debt, data on the labor market will be the highlight of the upcoming week. Greece’s creditors have offered a 5-month extension to repay the debt. A deal should be concluded by Tuesday or else Greece will default on the €1.6B debt with the International Monetary Fund (IMF). The Fed is keeping an eye on the early job report by the Labor Department which will help them to decide the optimum time to raise short term interest rates. A positive wage report will increase the prospects of a rate hike in September. Housing, manufacturing, and automotive sectors data is also expected to be released this week.

Pending Home Sales (Mon): The National Association of Realtors will report its pending home sales data on Monday. This is a measure of change in the number of homes under contract to be sold, but still awaiting the closing transaction. Pending home sales likely grew by 1.2% in May after a 3.4% rise in April. The recent pick up in the housing sector with an improving income level and lower mortgage rates, induces optimism on pending home sales. Last week, the Association reported a strong rise in existing and new home sales, primarily driven by higher demand from first time home buyers.

Chicago PMI (Tues): The Chicago Purchasing Manager’s Index is expected to come at a strong 50.1 in June and touch the expansion range. The index fell unexpectedly in May to 46.2, the lowest reading since March, due to the impact of lingering winter weather and a stronger U.S. dollar. The strength of the dollar hurt the export business, which led to a contraction in the Q1 GDP. The rise in the index will trigger GDP growth for the second quarter of the year.

CB Consumer Confidence (Tues): A positive consumer confidence report is expected on Tuesday as consumers are more optimistic on the U.S. economy. Increases in jobs and wages have boosted the consumers spending power. The CB consumer confidence Index is expected at 97.2 in June, up from 95.4 in May. The sharp rise in the Index follows Friday’s strong Consumer Sentiment Report from the University of Michigan.

ADP Nonfarm Employment Change (Wed): A stronger ADP nonfarm employment report is expected on Wednesday. About 218,000 jobs were likely added in the private sector in June, versus 201,000 in May. The May payrolls report reflected a 2.3% rise in hourly wages that was the strongest since August 2013. The ADP employment levels have been consistently above 150,000 the mark since January 2013.

ISM Manufacturing PMI (Wed): The ISM manufacturing PMI is expected at a strong 53.1 in June, higher than 52.8 in the previous month, indicating strengthening manufacturing activities at the U.S. factories. The Prices Paid Index is expected to edge up to 51.0 from 49.5, the highest since October 2014. In case the ISM report comes out as expected, it will be a sharp contrast with the weak manufacturing reading of U.S. Markit Survey that was released last week.

Nonfarm Payrolls (Thurs): The Labor Department will release the employment report on Thursday due to a government holiday on Friday. The US economy should see about 230,000 jobs added in June, lower than the 280,000 jobs in the previous month. The increase in Nonfarm Payroll employment in May was up from a revised 221,000 in April, led by job gains in professional and business services, leisure and hospitality, and health care. However, the mining employment continued to decline with lower energy prices which hurt operations. The unemployment rate rose slightly to 5.5% in the month of May.

Private Nonfarm Payrolls (Thurs): Private Nonfarm Payrolls is expected to increase by 228,000 in June against 262,000 jobs created in the previous month. Private nonfarm payrolls measures the change in the total number of paid U.S. workers of any business, excluding general government employees, private household employees, and employees of non-profit organizations that provide assistance to individuals and farm employees.

Unemployment Rate (Thurs): With the increase in jobs, the unemployment rate should likely decline to 5.4% from 5.5%. The Fed is awaiting a stronger job market and an inflation rate of 2% for a short term interest rate hike. A fall in the unemployment rate brings the Fed closer to its objectives and increases probabilities of a September rate hike.

Factory Orders (Thurs): Factory Orders are expected to have declined 0.5% in May vs. a 0.4% fall in April, on a fall in both durable and non-durable goods orders during the month. Durable goods orders fell unexpectedly in May due to lower demand in the commercial aircraft sector. The manufacturing activities grew by the slowest pace since October 2013 in June, pressured by investment spending cuts in the energy sector after an over 60% drop in crude oil prices, and coupled with a strengthening U.S. dollar.

Market Trends is provided by Fund&Grow – an organization dedicated to funding entrepreneurs and small business owners. Interested in $50,000 to $250,000 of business credit at zero or very low interest with no impact on your personal credit? Get funded now. You can also click here to sign up to get more market updates and cutting edge news about credit and funding for your business.