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Investing.com - A raft of economic data out of the United States will be in focus this week, as investors attempt to suss out the state of the American economy ahead of a key Federal Reserve interest rate decision. Expectations that the Fed will slash rates at a gathering next week have grown, although the upcoming trove of indicators could provide a new -- albeit delayed -- look into both the labor market and inflation. Meanwhile, Salesforce is due to report with investors keeping close tabs on the cloud-computing group’s artificial intelligence ambitions.
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1. U.S. ISM data ahead
Numbers from the Institute for Supply Management in the coming days will offer a glimpse into activity in both the U.S. manufacturing and services industries.
On Monday, ISM manufacturing PMI is seen coming in at 49.0 for November, still within the sub-50 territory denoting contraction, although at a slower pace than the preceding month. A metric of prices paid is also seen moving higher to 59.5 from 58.0.
Wednesday’s non-manufacturing PMI, meanwhile, is anticipated to come in at 52.0 from 52.4 in October. The services sector is key for the U.S., constituting more than two-thirds of American economic activity.
2. ADP jobs report in focus
Elsewhere, markets will have the opportunity to parse through figures tracking private-sector employment from payrolls processor ADP.
The number is expected to show that some 19,000 private-sector jobs were added last month, sliding from 42,000 in October.
While the ADP total is typically not viewed to be as comprehensive as the more complete official nonfarm payrolls report, analysts have been relying on it to provide an update on the health of the U.S. labor market during a data blackout caused by a recent federal government shutdown.
As a result, the ADP data may be one of the few job market indicators the Fed will receive prior to its crucial monetary policy decision later this month. A separate tracker of layoffs from private consultancy Challenger, Gray, & Christmas is also due out on Thursday, as well as a measure of weekly claims for unemployment benefits.
In the wake of the record-long shutdown, the U.S. Bureau of Labor Statistics said it would not be able to publish neither of its reports on employment and consumer price growth for October.
3. Michigan consumer sentiment survey due out
Elsewhere, Friday will feature a look at a survey of consumer sentiment from the University of Michigan.
Early last month, the index fell to almost a 3-1/2-year low, reflecting Americans’ concerns over the potential impact of the federal government shutdown on the wider outlook.
The figures also confirmed what some on Wall Street have come to refer to as the "K-shaped" recovery of the U.S. economy, in which high-income earners appear to be thriving while lower-income consumers are struggling.
Those with large stock holdings were particular beneficiaries of "continued strength" in equity markets, although some concerns have since emerged around the sustainability of frothy tech sector valuations and runaway spending on artificial intelligence.
The Michigan sentiment results could also shed some light on American consumers at the opening of the key holiday shopping season. Data over the weekend pointed to a surge in online spending during the annual Black Friday sales event, even as wariness over the economic backdrop persisted.
Separate gauges of personal income and spending are also set to be unveiled on Friday.
4. Fed in blackout period
The Fed entered its typical pre-meeting blackout period on Saturday, during which members are limited when it comes to providing public commentary on monetary policy.
There is currently a roughly 88% chance of a quarter-point decrease in interest rates at the Fed’s December 9-10 meeting, with the central bank driven by a desire to help prop up a fading jobs picture, according to CME FedWatch. Only about 12% of investors expect borrowing costs to remain steady at its current range of 3.75% to 4%.
Given a relative dearth of fresh economic data during the government shutdown, markets have been keeping especially close tabs on comments from Fed officials.
In September and October, the Fed slashed interest rates by a total of 50 basis points, in a sign that policymakers may be prioritizing supporting the labor market over indications of sticky inflationary pressures.
Against this backdrop, traders are calling for a so-called "hawkish cut," in which the Fed brings down rates but leaves open the option of altering policy to combat inflation at future meetings, analysts at BofA have said.
5. Salesforce to report
On the earnings calendar, quarterly results from Salesforce are likely to be a highlight of the week.
The cloud-computing firm expanded its partnerships with AI-darlings OpenAI and Anthropic during the quarter, folding their technology into its Agentforce 360 platform in a bid to provide high-quality AI tools to a range of businesses and regulated industries.
Agentforce 360, which Salesforce launch globally in October, aims to help create, deploy and manage AI agents across an organization.
Powered by hopes for such tools, the company has said it expects to generate revenue of more than $60 billion by 2030, even as broader economic uncertainty and volatile consumer spending cloud the outlook.
Its fiscal third-quarter sales forecast, first published in September, came in below Wall Street estimates, fueling some worry around client expenditures on its AI agent platform.