Shortened Week Of Important Econ Data

Tuesday, July 5, 2016

Following an extended U.S. holiday weekend, which came after an impressive market rebound following the previous week’s surprise Brexit decision, futures for U.S. markets are down ahead of the bell this morning. The S&P 500 is down 14 points as of an hour before the market open, the Nasdaq is down 29 points and the Dow down 105.

Much of this ought to be seen in the context of a big economic data week, which will be followed by Q2 earnings season beginning next Monday with Alcoa (NYSE:AA) results after the close. May factory orders, jobless claims and, of course, the ADP (NASDAQ:ADP) and BLS June jobs reports will all provide context and articulation to our current market environment.

The first forward indicator of the health of the U.S. labor market has been released this morning, with the Paychex (NASDAQ:PAYX) Small-Business Employment Index reporting a 0.21% increase following Monday’s decline. Of course, these numbers only reflect employment among companies with fewer than 50 employees, but last month’s Paychex survey results did happen to antiquate the low June Jobs Report from the Bureau of Labor Statistics (BLS).

Construction made the biggest expansion for small businesses last month, helping this index to its highest level of 2016 as well as the highest since a year ago. Small businesses often hire part-time workers to cover higher summertime demand, but wage growth of roughly 3.5% year over year was another positive in this latest read. The strongest region for small business in June was in the Southeast, with Florida looking good with housing construction.

Tomorrow morning we expect ISM Non-Manufacturing, or Services, results for June. The prior month’s level dipped lower than expected to 52.9 (anything over 50 indicates expansion), and the consensus range is between 52 and 54. This follows the ISM Manufacturing survey last Friday, which posted a better-than-expected 53.2, which helped bolster stocks in late-week trading.

Premier electric vehicle manufacturer Tesla (NASDAQ:TSLA) capped off a very tough first half of 2016 by missing Q2 delivery targets, making it harder for the company to meet full-year goals of 80-90K auto deliveries this year. The company delivered fewer than 30K in 1H-16, indicating that in order for Tesla to make its 2016 numbers it will have to deliver 2200 cars a week in Q3 and 2400 a week in Q4.

Mark Vickery
Senior Editor

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