The Week Ahead: Jobs, Greece and China

by CC October 2, 2011 10:50 pm • Commentary

Next Week’s Tape: Hoping for Hiring (WSJ)


Eurozone manufacturing PMI for September

ISM manufacturing for September

September auto sales

Construction spending for August


Fed Governor Sarah Bloom Raskin speaks

Fed Chairman Ben Bernanke testifies in Congress on the economy


ADP payrolls report for September

ISM non-manufacturing for September


Bank of England monetary policy announcement

European Central Bank monetary policy announcement

Weekly jobless claims

Treasury Secretary Tim Geithner testifies in Congress


Nonfarm payrolls and unemployment for September

Atlanta Fed President Dennis Lockhart speaks

Consumer Credit for August





Yum! Brands






Constellation Brands




The Week Ahead

It is a big week for economic data.

The most important news will by Friday’s employment report.  I am not expecting a strong result.  This week’s improvement in initial claims occurred after the survey period for the jobs report.  The ADP private employment report on Wednesday will be an early indicator for this.

Initial jobless claims will help to clarify whether last week’s improvement was mostly the seasonal adjustment or a real improvement.

The ISM index on Monday will be closely watched, and provides an early signal on employment.  ISM services on Wednesday is also of interest.

While the Europe story will have more events next week, we can expect continuing news and opinion.

The Bonddad Blog, highlights auto sales as especially important in light of the ECRI conclusion (where they also have some reservations).


Greece’s government approved 6.6 billion euros ($8.8 billion) of austerity measures including firing state workers, to show it can trim its budget deficit enough to secure a pending aid payment and a second rescue package.

The steps will help reduce the deficit to 6.8 percent of gross domestic product, or 14.7 billion euros, from 8.5 percent of GDP this year, according to an e-mailed statement from the Athens-based Finance Ministry last night. That is more than the gap of 6.5 percent for 2012 and 7.6 percent this year agreed with the EU, International Monetary Fund and European Central Bank, the so-called troika, to secure emergency loans to prevent default.

The troika has been squeezing Prime Minister George Papandreou for more cuts as the country’s three-year recession saps the revenue needed to close the budget gap. The additional measures aim to secure disbursement of an 8 billion-euro loan payout this month and a second rescue of 109 billion euros agreed to by EU leaders on July 21.

“Important decisions which need to be taken on a European level depend first and foremost on us,” Papandreou told his ministers last night, according to an e-mailed statement from his office. “We need to show our dedication to reaching the goals.”


Greece will miss a deficit target set just months ago in a massive bailout package, according to government draft budget figures released on Sunday, showing that drastic steps taken to avert bankruptcy may not be enough.

The dire forecasts came while inspectors from the International Monetary Fund, EU and European Central Bank, known as the troika, were in Athens scouring the country’s books to decide whether to approve a loan tranche. Without that installment, Greece would run out of cash as soon as this month.

The 2012 draft budget approved by cabinet on Sunday predicts a deficit of 8.5 percent of gross domestic product (GDP) for 2011, well short of the 7.6 percent target.

The 2012 deficit is set to meet a nominal target of 14.6 billion euros, but at 6.8 percent of GDP it falls short of a target of 6.5 percent, because the economy will shrink further.

“Three critical months remain to finish 2011, and the final estimate of 8.5 percent of GDP deficit can be achieved if the state mechanism and citizens respond accordingly,” the Finance Ministry said in a statement.


Wonder why everyone is so scared about a possible Chinese slowdown? Here’s a stat for you: China is now forecast to contribute 28 per cent and 30 per cent of global growth in 2011 and 2012, respectively.

That’s an updated prediction from a concerned Citigroup note entitled “Is China all that’s left?”, and takes into account recent downward revisions to growth in the US and Europe. It’s an awful lot of weight to carry for a country that is showing several signs of homegrown stress.

Nomura, for example, says on Friday that the Chinese credit crunch is worsening. In a short note it uses the gap between Shibor (the interbank interest rate in Shanghai) and the bill discount rate (how much banks charge firms when they exchange commercial bills for cash) to gauge the current level of the funding squeeze. At 5.7 per cent, the gap is the highest since data became available, according to Nomura.