Investors will have to wait until Friday for the most significant piece of economic data due next week – the November jobs report.
Economists are predicting nonfarm payrolls to jump by about 118,000, up from 80,000 in October, but still far below the estimated 200,000 jobs needed to have an impact on the unemployment rate, which is expected to hold steady at 9%.
Without a significant increase in job creation consumer sentiment will remain at recessionary levels. That means consumer spending will remain tight, as Americans buy only what’s necessary.
That bodes poorly for the overall economy, 70% of which is accounted for through consumer spending.
ADP’s employment forecast is due Wednesday. It sometimes (but not all the time) forecasts where the government numbers are headed.
Retailers will be keeping a sharp eye on the jobs figure, hoping for a surprise to the upside, which could add a bit of optimism as Americans head into the holiday spending season.
But any optimism derived from a solid jobs report could be overshadowed by bad news from Europe, where borrowing costs for troubled euro zone countries continues to spike higher.
Italian bond yields hit record highs on Friday, well above the 7% threshold at which Portugal, Ireland and Greece sought bailouts. If borrowing costs become untenable, debt-laden countries will be unable to pay down and refinance their debt, which could cripple the European financial system.
No solution seems imminent.
A broad gauge of consumer sentiment will be released Tuesday when the Conference Board’s confidence index is due. The index is expected to climb to 44.9 in November, up from a recessionary level 39.8 in October.
The Reuters-University of Michigan consumer sentiment index released earlier this month inched higher, showing consumers feel a little better now than a month ago.
Also expected to rise is the Institute for Supply Management's November factory activity, due Thursday. Economists are predicting an increase to 52.0 from 50.8 last month. Factory activity is a direct indicator of demand. Weak consumer demand for U.S. goods has hobbled the economic recovery for months.