The figure of Federal Reserve Chairman Alan Greenspan will be hovering over the markets this week. While the Fed’s policymaking Open Market Committee decided last week not to raise interest rates, analysts figure the committee gave Greenspan authority to act on his own before the next meeting Nov. 15. If so, Greenspan will have several key economic indicators to study in the next five days. So far at least, Wall Street has reacted well to the Fed’s decision to refrain from what would be the sixth interest-rate increase this year. Last week the market rose three days in a row, then fell in mixed trading, with the Dow industrials down two days in a row. But if Greenspan decides to go ahead with an increase before the November elections, it likely would knock the market down strongly for a day or two and let the steam out of any October rally.
WHO’S BUYING?
More Top Picks Ring Pan Tilt
On Monday the National Association of Purchasing Management issues its numbers for September. They often reflect an earlier index reported by the Purchasing Management Association of Chicago. On Friday the Chicago index was reported as rising to 63.3 percent in September from 61.6 percent in August. In July the number was 63.0. That should mean a strong reading for the national index. A reading above 50 percent indicates expansion in the manufacturing sector, a reading below that level indicates a contraction.
ROAD SIGNS
The much-followed Index of Leading Indicators comes out with August figures Tuesday. The July period had a reading of zero, no gain and no contraction indicated. Economists say that reflected skewed manufacturing schedules, especially for autos, rather than the end of economic growth as we have come to know it. Things will be better in August, they say. Specifically, Joan D. Schneider, economist with BA Securities Inc., a subsidiary of BankAmerica Corp., predicts an increase of seven-tenths of a percentage point. “This summer`s production schedules heavily affected manufacturer’s orders for durable goods, which plunged by 4 percent in July and then spurted by 6 percent in August,” Schneider said in a report. “The average increase in the leading indicator index for the past two months is consistent with the outlook for continuation of the expansion early next year.”
AUTOS PACE GROWTH
Manufacturers report on orders, shipments and inventories Wednesday. Those numbers, though, may not seem so important after the national purchasing and leading indicator reports. But light-vehicle sales for September are reported as well Wednesday and are expected to show continuing gains. August’s pace was the second highest since before the 1990 recession began, and September’s numbers may exceed those.
AFTER AUTOS COMES HOUSING
U.S. economic recoveries traditionally are led by autos and housing. Housing numbers have been strong of late despite the increase in mortgage interest rates occasioned by the five Fed interest rate hikes. Housing completion numbers are expected Thursday.
FOLLOWED BY EMPLOYMENT
The week’s most important indicator will be the unemployment numbers for September issued Friday. Estimates are that the 6.1 percent unemployment figure for August will be lowered a notch, to 6 percent, both within the realm traditionally associated with wage pressure. Will Greenspan hold still?