Key US events coming up, what's in store? - Nomura

Analysts at Nomura previewed the next key events on the US calendar.

Key Quotes:

"Initial jobless claims: Although picking up slightly over the past few weeks, initial jobless claims remain very low by historical standards. As firms continue to grapple with a tightening labor market, we expect them to hold on to current employees, which should put downward pressure on initial jobless claims over the medium term.

Productivity: Based on the monthly employment reports from the BLS, aggregate hours in the nonfarm business sector likely increased at a pace close to 2% q-o-q saar in Q1 2018. Incorporating the BEA’s initial estimate of 2.3% for Q1 GDP growth, nonfarm productivity growth could be modest for the second consecutive quarter. On a y-o-y basis, productivity growth is likely to remain close to 1%. Unit labor costs in Q4 2017 increased 2.5%, partly driven by a 0.05% decline in productivity growth. We expect productivity to remain subdued in light of structural changes in the economy.

Trade balance: According to the Census Bureau’s advance goods trade balance report, net exports of goods grew sharply as imports dropped unexpectedly while exports grew solidly. Reflecting these estimates, we forecast a sharp narrowing of the nominal trade balance to $48.7bn, from $57.6bn (Consensus: $50.0bn). We think the slowdown in goods imports in March was likely transitory. Incoming survey data on trade suggest steady momentum in import activity and domestic demand appears to be firm. However, we will closely monitor incoming data to discern any impact from changes to trade policies.

Factory orders: New orders received at factories likely increased strongly in March reflecting an outsized increase in aircraft orders according to the March advance durable goods report. However, the report also indicated declines in core capital goods shipment and orders with downward revisions to previous months’ estimates. This report points to weaker-than-expected momentum in business spending on equipment in Q1. However, this weakness may be transitory as business sentiment remains elevated and new tax policies should remain favorable. That said, new orders of core capital goods were down 0.1% m-o-m in March with downward revisions to February, implying that a pickup in equipment investment could be more gradual in coming months. 

ISM non-manufacturing index: Business activity likely expanded steadily despite rising concerns over trade tensions. We expect a healthy reading of 58.6 for the April estimate of the ISM non-manufacturing index (Consensus: 58.0), down slightly from 58.8 in March. Incoming business surveys reflected mounting concerns over escalating trade tensions, but incoming data point to steady expansion in business in non-manufacturing sectors which appears consistent with elevated demand."