It’s a packed week for economic news.
The Institute for Supply Management releases its index of manufacturing sector activity for September. In the past three months, the index has moved from solid expansion to the cusp between expansion and contraction — and analysts expect it to show the nation’s factories even closer to that edge last month. Look for the index to fall to 50.3 from 50.6 (50 is the line between expansion and contraction).
However, there could be some better news on the vehicle sales front. Analysts expect the annualized pace of sales to rise to 12.6 million cars and light trucks, from 12.1 million in August, reflecting a bounce-back after supply disruptions caused by the spring earthquake in Japan.
Federal Reserve Chairman Ben S. Bernanke appears before the Joint Economic Committee to discuss the economic outlook. He will probably be asked about the Fed’s decision last month to change the composition of its bond portfolio to try to push down longer-term interest rates, known as a twist operation. Look for him to hear pressure from two directions — from Republicans opposed to further monetary activism and Democrats eager for the Fed to do more to try to reduce unemployment.
Also Tuesday, the Commerce Department will report on August factory orders, which are expected to have flatlined after rising 2.4 percent in July.
The service sector seems to be holding up better than manufacturing after the summer slowdown in growth, although it, too, isn’t growing as fast as it was. Look for the Institute for Supply Management’s index of activity at nonmanufacturing businesses to fall to 52.8 from 53.3 for September.
Job creation ground to a halt in August; the September report will show whether it picked up last month. Economists expect that it did, forecasting 50,000 net new jobs were added. That’s nothing to write home about in a time of 9.1 percent unemployment (more than twice as many jobs are needed to keep up with a growing population). The unemployment rate is expected to be unchanged on weak job growth.
— Neil Irwin
John O’Sullivan of The Economist apparently prefers to attack nice, narrow topics. His special report in the new issue covers “The World Economy” and offers interesting food for thought on how the economic balance of power between the West and the developing world is likely to evolve in the years ahead.
Find links at washingtonpost.com/mustreads.