The Week Ahead: All Eyes On U.S. Job Market

Investors won’t be expecting much out of European policy makers this week, other than to not make matters worse.  Make things better? That’s for another time. Not this week. Maybe in June.

This week, investors will be waiting for U.S. jobs data on Thursday and unemployment figures on Friday. If they at least don’t come in lower than expected, it will give investors confidence that the world’s biggest economy is chugging.

Jobless claims were most recently skewed by the difficulties in seasonal adjustment surrounding the Easter holiday, but have since come to rest close to prior levels. There is a chance, the market hopes, that U.S. employment can continue to expand at a moderate pace.  If so, then the U.S. may be able to grow over 2% this year even as Europe heads into a recession.

The market will start the day in New York with U.S. housing and consumer confidence data Tuesday.

The Case-Shiller Index will likely show falling housing prices.

Nomura Securities in New York has it at -2.9%.

Then later in the day, look for U.S. consumer confidence to have improved thanks to falling gasoline prices.  Gas prices fell at the pump ahead of the recent three-day Memorial Day weekend, which rarely ever happens here.  Nomura expects the Conference Board’s consumer confidence index to increase in May to 70.6.

European manufacturing data comes out of Germany on Thursday then out of the U.K. and eurozone on Friday.  Look for weakening PMI survey figures. The best one can hope for is data remaining unchanged, which is likely in stronger Germany at this point than it is in the overall eurozone.

Global View in a Nutshell

• Expect growth in 2012 to slow as the eurozone enters recession and there are knock-on effects to the rest of the world.
• The U.S. should be sufficiently resilient to come out 2%-plus on top, while reconstruction spending should help Japan’s growth.
• Expect China’s growth to reaccelerate (yes, you heard that right) in the second half after a first half slowdown to just above 8%.
• Oh yeah…more policy errors in Europe; plus the U.S. end-2012 “fiscal cliff” still in full effect; another risk – a China fixed investment slump.
• Upside risks: U.S. consumers shrug off post-crisis blues and start shopping on credit cards again; oil prices drop further; euro tensions ease.
• Expect oil prices to continue to reverse their early-2012 surge and inflation pressures throughout the global economy.
• The eurozone sovereign debt crisis is set to keep the euro under increasing pressure. The dollar is king once again.

Read full article here:  http://www.forbes.com/sites/kenrapoza/2012/05/28/the-week-ahead-all-eyes-on-u-s-job-market/