Daily U.S. economic outlook

Today's domestic highlight is the August construction PMI. Sentiment and output growth in the sector have weakened over the last year, although both remain robust. Moreover, the last two PMI outturns suggest that the slowdown in activity may have bottomed out. The PMI is expected to edge up from 57.1 in July to 57.3, which is around two points higher than its post-crisis average, says Lloyds Bank. 

With markets viewing Friday's employment report as a critical input into the FOMC's policy rate decision on September 17, this afternoon's ADP employment change figures for August will attract even more scrutiny than usual. According to the ADP, private sector payrolls rose by 185k in July, which was the smallest  increase since 179k in April. A rebound to 220k in August, which is stronger than the consensus, notes Lloyds Bank. Following last week's upbeat durable goods orders print for July, the more comprehensive factory orders release is expected to show that manufacturing demand started Q3 on a reasonably solid footing.

The FOMC will also be interested in the final estimates of Q2 nonfarm productivity and unit labour cost growth where the upward revision to Q2 GDP growth from 2.3% to 3.7% should be matched by a sizeable and welcome rise in hourly productivity growth from its previous 1.3% preliminary Q2 estimate, adds Lloyds Bank. Commensurately, unit labour costs are set to soften on the quarter. The latest Fed Beige Book, which covers early July through to mid-August will provide some further colour on the recent slew of fairly upbeat US domestic releases.