As we come to the end of August, which has been filled with both fluctuating stock market, crypto, and economic activities, as well as the increased spread of the delta variant of the COVID-19 pandemic, this week will usher us into September, starting with some companies reporting their quarterly performance. The much-awaited jobs report from the U.S. Labour Department will also be released.
The August report, which the U.S. Labour Department will release on Friday, will offer an updated look at how U.S. economic activity has been impacted by the surging Delta variant infections this month and broadly more broadly throughout the summer of 2021.
According to economic data from Bloomberg, consensus economists expect to see that 750,000 jobs have been added to the job market in August. This would represent a significant improvement of the job market performance compared to pre-pandemic times. However, this is almost 200,000 less than what was added in July, which was 943,000. Although that is the case, analysts are confident that the U.S. unemployment rate will likely improve in the forthcoming report from 5.4% reported in July to 5.2%.
Apart from the numbers, figures and stats, the August jobs report is also expected to capture the impact of the latest surge in coronavirus cases on the U.S. labour market. In the previous few weeks, recent economic reports have already reflected the effects of the Delta variant on economic activity.
According to IHS Markit’s latest purchasing managers’ index reports, the rate of job creation in the services sector dropped to the lowest since February 2021, and the same happened in the manufacturing industry, where workforce numbers increased by the least since 2020.
Last Friday, Bank of America economist Michelle Meyer wrote to investors and analysts that high-frequency labour market data reflects a slowdown in employment activity in the August payroll survey week. Meyer expects non-farm payrolls to grow by just 600,000 for August to be slightly different from consensus economists.
Meyer said they based their below-consensus non-farm payrolls forecast on the marked weaker “high-frequency employment” data captured in a payroll survey between July and August, which showed that the Homebase and UKG employment series were both down 3.4% and 2.4%, respectively.
Another thing to look out for in the August jobs report is the kind of data that the Federal Reserve Bank would use to inform its decision-making regarding its monetary policy. The Fed will be keen to look out for signs of a recovering labour market that warrant a less accommodative tilt. Recently, several Fed officials have been paying more attention to the labour market’s recovery to determine when the Federal Reserve Bank should announce the start of gradually reducing asset purchase program. Since March last year, the Fed has been buying assets worth $120 billion per month as one of the measures to shield the U.S. economy against the effects of the coronavirus pandemic.
During the virtual Jackson Hole virtual symposium last week, Federal Reserve Chairman Jerome Powell stated that there had been clear progress in the labour market recovery. This could make it appropriate for the Fed to start tapering its asset purchase program this year if the recovery continues to improve. However, Powell also noted that the ongoing surge of the delta variant infections could knock the recovery off its trajectory if the tapering is poorly timed.
Zoom earnings report
Zoom Video Communications, Inc. (ticker: ZM), a videotelephony and online chat services provider headquartered in San Jose, California, will release the earnings report for its second quarter of the 2021 fiscal year (Q2 FY2021) that ended on July 31, 2021. According to FactSet, consensus analysts expect Zoom to report an Earnings Per Share (EPS) profit of $1.16 in Q2 FY2021, up from an EPS of 92 cents recorded in the same quarter 12 months ago. Zoom sales are also expected to have grown almost 50% in Q2 FY2021.
Since the pandemic forced businesses, organisations, schools, government departments, etc. to move their business and operations to the cloud, Zoom has been posting positive earnings reports that have continuously exceeded analysts’ expectations, making it one of the best performing company stocks in the pandemic era. The company had stocked up enough cash and value to add other assets to its portfolio, like the announced record-setting all-stock acquisition of another cloud communications company Five9 in a deal valued at around $14.7 billion. This transaction, which was announced last month, is expected to be completed by Q2 FY2022.
Monday: Zoom Video Communications (Z.M.) after market close
Tuesday: Crowdstrike (CRWD) after market close
Wednesday: Campbell Soup (CPB) before market open; Okta (OKTA), Chewy (CHWY), C3.ai (A.I.), Asana (ASAN) after market close
Thursday: American Eagle Outfitters (AEO) before market open; Broadcom (AVGO), DocuSign (DOCU), MongoDB (MDB) after market close
- Pending home sales, month-over-month, July (0.4% expected, -1.9% in June);
- Dallas Fed Manufacturing Activity index, August (23.0 expected, 27.3 in July)
- FHFA Home Price index, month-over-month, June (1.9% expected, 1.7% in May);
- S&P CoreLogic Case-Shiller 20-City index, month-over-month, June (1.87% expected, 1.81% in May);
- S&P CoreLogic Case-Shiller 20-City index, year-over-year, June (18.60% expected, 16.99% in May);
- MNI Chicago PMI, August (68.0 expected, 73.4 in July); Conference Board Consumer Confidence, August (123.4 expected, 129.1 in July)
- MBA Mortgage Applications, week ended August 27 (1.6% during prior week);
- ADP employment change, August (650,000 expected, 330,000 in July);
- Markit U.S. Manufacturing PMI, August final (61.2 expected, 61.2 in prior print);
- Construction spending, month-over-month (0.2% expected, 0.1% in June);
- ISM Manufacturing index, August (58.5 expected, 59.5 in July)
- Challenger Job Cuts, year-over-year, August (-92.8% in July);
- Initial jobless claims, week ended August 28 (346,000 expected, 353,000 during prior week);
- Continuing claims, week ended August 21 (2.862 million during prior week);
- Unit labour costs, Q2 final (1.0% expected, 1.0% in prior print);
- Trade balance, July (-$74.1 billion expected, -$75.7 billion in June);
- Factory orders, July (0.3% expected, 1.5% in June);
- Durable goods orders, July final (-0.1% in prior print);
- Non-defense capital goods orders, excluding aircraft, July final (0.0% in prior print);
- Non-defense capital goods shipments, July final (1.0% in prior print)
- Change in non-farm payrolls, August (750,000 expected, 943,000 in July);
- Change in manufacturing payrolls, August (700,000 expected, 703,000 in July);
- Unemployment rate, August (5.2% expected, 5.4% in July);
- Average hourly earnings, month-over-month, August (0.3% expected, 0.4% in July);
- Average hourly earnings, year-over-year, August (3.9% expected, 4.0% in July);
- Markit U.S. services PMI, August final (55.2 expected, 55.2 in prior print);
- Markit U.S. composite PMI, August final (55.4 in prior print);
- ISM Services Index, August (62.0 expected, 64.1 in July)