The December 5 week will have little economic data to keep markets' attention with the November employment report out of the way, and the data on retail sales and inflation over a week away. However, monetary policy announcements from major central banks could prove timely as the euro zone struggles to meet the challenges of the sovereign debt crisis, and the global financial sector tries to limit the potential contagion.
The first of the monthly reads on December consumer confidence will be the IBD/TIPP Economic Optimism Index on Tuesday, and the preliminary Reuters/University of Michigan Consumer Sentiment Index on Friday. The November data suggested that confidence was starting to recover after recent lows in the summer months, and December should build on this improving trend. Gasoline prices have declined further, and the labor market is showing some slow and very modest improvement. However, financial markets remain volatile and the economic future less uncertain.
The ISM Non-Manufacturing Index for November on Monday could be consistent with sustained expansion near the current pace. Some of the regional data on service sector activity have turned higher for the month as conditions associated with unsettling events in the summer months continue to fade.
The international trade deficit for October on Friday will provide the first information to fill out the net exports component of fourth quarter GDP. A narrowing in the trade deficit helped support growth in the third quarter, and should also play a part in the fourth quarter. There may be a little late imports of goods for holiday inventories, but exports of hard goods like aircraft and motor vehicles will probably be respectable.
The data on new orders for factory goods in October on Monday will likely look soft. Durable goods orders were already reported down 0.7% for the month, and declines in petroleum should restrain the numbers for nondurable orders. However, since a strong report is anticipated for November due to some hefty orders for civilian aircraft, a weak report will generate less concern about conditions in the factory sector.
The report on factory orders will...Read more
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