Data to show whether business spending is holding steady

All the data that Wall Street has seen lately seem to be pointing to a dual economy, one in which businesses are generally faring better than consumers. Reports coming out this week will indicate whether that trend is continuing.

Evidence of this divergent economy keeps building -- the average consumer is suffering, but business spending, particularly abroad, appears to be keeping the U.S. economy from sinking severely, even as the financial sector continues to struggle.

“Are businesses still buying? It looks like the answer is yes,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group. Companies are increasingly looking for cheaper prices, she said, but “demand is still there.”

How well businesses are doing is expected to be gleaned from the Institute for Supply Management. The trade group of purchasing executives is forecast to report that the manufacturing and non-manufacturing sectors saw virtually flat activity in August compared with July, according to the median estimate of economists polled by Thomson Reuters.

Considering that both sectors have seen severe contraction over the last year, reports that activity was flat or even slightly higher than expected will be considered upbeat on the Street.

Perhaps the key economic report this week will be Friday’s Labor Department assessment of employment during August. It will indicate how companies are doing but also give clues about consumers, simply because when Americans are working, they’re in a better position to feed economic growth.

Economists surveyed by Thomson expect the economy to have lost jobs for the eighth straight month, with employers having cut a net 75,000 positions, bringing the cumulative job loss this year above 500,000.

The market also anticipates an uptick in the unemployment rate, which hit a four-year high of 5.7% in July. Economists predict an increase to 5.8%.

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At a glance

Today

Labor Day. U.S. financial

markets are closed.

Tuesday

Results of weekly Treasury auction.

Commerce Department

releases construction

spending data.

Institute for Supply

Management releases its

manufacturing index.

Wednesday

Commerce Department

releases factory orders.

Major automakers report

U.S. auto sales.

Quarterly earnings results expected from H&R; Block, Hovnanian Enterprises Inc. and Staples Inc.

Thursday

Labor Department releases weekly jobless claims and worker productivity for second quarter.

reddie Mac releases weekly mortgage rates.

Institute for Supply Management releases its non-manufacturing index.

The nation’s retailers report their same-store sales.

Quarterly earnings results expected from Toll Bros. Inc.

Friday

Labor Department releases unemployment data for

August.

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Source: The Associated Press

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Los Angeles Times