Unlike last week’s light economic calendar, this week’s calendar is packed with key economic readings and announcements covering everything from jobs to GDP growth, personal spending and income, manufacturing, construction spending, light vehicle sales, consumer confidence, and, last but not least, the Federal Reserve’s latest monetary policy statement.
What should you keep an eye on and why should scrap recyclers care? If the consensus forecasts hold, a couple of themes should emerge this week:
- Job growth is slowing but labor markets remain tight: according to the consensus forecast, U.S. nonfarm payrolls only grew by around 80,000 in October, down from 136,000 in September. But the unemployment rate is expected to remain very low at around 3.6 percent and a separate report on initial unemployment claims is expected to have only edged up slightly, which means hiring and retaining new employees should remain challenging for recyclers for some time to come.
- Growth is slowing: the forecast for real GDP growth in the 3rd quarter is around 1.5%, down from 2.0% growth in the 2nd quarter. In addition, manufacturing PMI is expected to come in at 48.7 in October – up from 47.8 in September but still below the 50-level separating expansion from contraction. All other things being equal, slower U.S. economic and manufacturing output tend to weigh on scrap demand and prices as 70% of the scrap processed in the U.S. is sold to U.S. manufacturers.
- The Fed is widely expected to cut rates again this week: markets have already priced in a quarter point cut but should the Fed’s monetary policy stance become even more accommodative, investor sentiment could improve and dollar appreciation could ease, making U.S. exports somewhat more competitive. The problem is that other major central banks are also loosening their policies and heightened global economic uncertainty makes the dollar (and Japanese yen) attractive options.
Overseas, the Financial Times reports “There are also central bank decisions in Japan, Canada, Brazil and Colombia. Brexit will continue to dominate UK politics, as the country waits to see how long an extension the EU will grant while Boris Johnson tries to force a general election. The Central Committee of China’s ruling Communist party begins a four-day meeting on Monday, amid speculation some of the younger generation of leaders may be promoted to the Politburo Standing Committee.” We’ll take a look at how the week’s key economic, trade, and other developments line up with expectations in next week’s ISRI Market Report. Have a great week!