3 Numbers to Watch: UK industrial production, US NFIB and JOLTS
Recent numbers on the UK economy suggest that the macro trend is improving and so today’s industrial production report for Britain will be a focal point in the day’s macro news. Meanwhile, updates in the US on the mood for the small business sector, followed by fresh numbers on hiring, will round out the day’s numbers.
UK Industrial Production (08:30 GMT): The British pound has firmed up against the euro and the US dollar in recent weeks, which analysts say is a reflection of the improving outlook for the UK economy. Yesterday’s update on the OECD's composite leading indicator for Britain adds another data point to this upbeat view, reflecting a slight improvement in the growth trend. The market will be closely watching today’s industrial production report for additional perspective.
Industrial output increased in the last two monthly releases but today’s April number is expected to be flat, based on the consensus forecast. But it would take a deeply negative report to dent the brighter outlook for Britain’s economy. Last week’s better-than-expected rise in the CIPS/PMI Manufacturing Index for May, for instance, hints that the recent run of progress in economic news will persist. For more insight on the macro trend, also keep an eye on today’s monthly update of UK GDP (14:00 GMT) from the National Institute of Economic and Social Research (NIESR). The trend on this front has been improving lately, the group advises, and so it’ll be useful to see if this number confirms the crowd's view.
US NFIB Small Business Optimism Index (11:30 GMT): Smaller companies have been a conspicuous laggard in the recovery in recent years, and the last six months have been especially rough on sentiment, according to this benchmark. But the recent revival in this mood metric for this corner of the economy—the main source for most of the nation’s employment—suggests that this year’s second half could bring strong growth. In that case, small companies finally may be poised to create jobs at a faster rate.
But let’s not get ahead of ourselves. The employment numbers so far for small companies have been unimpressive, according to ADP data. That's probably a key reason why the overall rate of expansion has been moderate at best. But if today’s NFIB Index posts another rise, as the consensus forecast expects, the market will have a new number to digest for considering the prospects of better days ahead.
US Job Openings and Labor Turnover Survey (14:00 GMT): The Labor Department’s JOLTS report is published with a one-month lag versus the payrolls data, but this update is still worth reviewing for a deeper read on the economy’s capacity to mint jobs. The main question these days: Is the number of employment openings still trending higher? It’s always hard to tell across a few months, although it appears that the push higher is facing new headwinds lately.
Today’s release is likely to keep the debate alive about what comes next. The consensus view sees a slightly higher number for April versus March, but the expected gain isn’t strong enough to wipe away worries that companies are still reluctant to hire at more than a modest pace. Nonetheless, with last week’s satisfactory if not robust rise in payrolls for May, even tepid progress in the JOLTS numbers will be enough to keep the market assuming that the economy will continue to grow modestly through the summer.