A week that combines an FOMC meeting and an
employment report may start off with a bombshell on Monday, that is a
sudden surge in the core PCE price index to a 2.0 percent year-on-year
rate. Such a result would mean that inflation is suddenly at target
which would heat up the FOMC debate on how gradual rate hikes should
remain. Vehicle sales will be the highlight for Tuesday offering the
first glimpse on second-quarter consumer demand and coming out
following the morning releases of ISM manufacturing, where continued
strength is the call, and construction spending where new strength is
expected. And though no rate action is expected, the FOMC dominates
Wednesday's calendar with attention focused on the economic outlook and
the committee's inflation expectations. Thursday will offer the latest
on cross-border trade and also on productivity going into Friday's
employment report where solid bounce-back strength and a move lower for
the unemployment rate are the calls. To say the least, it looks like a
strong week is in store.
Monday
Personal Income for March
Consensus Forecast, Month-to-Month Change: 0.4%
Consensus Range: 0.2% to 0.4%
Consumer Spending
Consensus Forecast, Month-to-Month Change: 0.4%
Consensus Range: 0.3% to 0.5%
PCE Price Index
Consensus Forecast, Month-to-Month Change: 0.1%
Consensus Range: 0.0% to 0.2%
PCE Price Index
Consensus Forecast, Year-on-Year Change: 2.0%
Consensus Range: 1.8% to 2.1%
Core PCE Price Index
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: 0.1% to 0.3%
Core PCE Price Index
Consensus Forecast, Year-on-Year Change: 2.0%
Consensus Range: 1.8% to 2.1%
Econoday's year-on-year consensus for the core PCE price index
is expected to jump from 1.6 percent to 2.0 percent and suddenly hit
the Federal Reserve's price target. Yet the expected monthly increase is
a less spectacular 0.2 percent which would shift focus to the easy
2017 comparison for the yearly rate. The PCE price index is not expected to show much pressure at all, up only 0.1 percent on the month for a year-on-year rate of also 2.0 percent. Personal income is seen rising 0.4 percent while consumer spending is also expected to come in at 0.4 percent.
Chicago PMI for April
Consensus Forecast: 57.8
Consensus Range: 55.5 to 60.0
Strong growth but only modest acceleration is the consensus for the Chicago PMI,
to a consensus 57.8 in April vs 57.4 in March. Capacity stress has
been a question for this sample as delivery times have been lengthening
and skilled workers hard to find.
Pending Home Sales Index for March
Consensus Forecast, Month-to-Month Change: 1.0%
Consensus Range: 0.5% to 1.8%
Pending home sales are expected to
rise 1.0 percent in March after posting a very sharp 3.1 percent jump
in February. The resale market has been showing some signs of life
though the longer-term trend has been flat.
Dallas Fed General Activity Index for April
Consensus Forecast: 18.0
Consensus Range: 14.0 to 19.0
Forecasters are not looking for much cooling in the Dallas Fed's general activity index,
to a consensus 18.0 in April vs 21.4 in March. This report has flashed
signs of unsustainable growth making less severe strength a welcome
outcome.
Tuesday
Total Unit Vehicle Sales for April
Consensus Forecast, Annualized Rate: 17.2 million
Consensus Range: 16.8 to 17.6 million
Domestic-made Unit Vehicle Sales
Consensus Forecast, Annualized Rate: 13.0 million
Consensus Range: 12.9 to 13.5 million
Vehicle sales in April, at a consensus 17.2 million
annualized rate, are expected to not quite match March's pop higher to
17.5 million. Still, 17 million or better would point to a solid rate
for consumer spending in general.
PMI Manufacturing for April, Final
Consensus Forecast: 56.5
Consensus Range: 55.3 to 56.5
The PMI manufacturing index is
expected to come in at a final of 56.5 in April, unchanged from the
mid-month flash and well up from March. Orders have been running at
multi-year highs and, in a sign of capacity stress, delivery times have
been lengthening sharply.
ISM Manufacturing Index for April
Consensus Forecast: 58.7
Consensus Range: 57.5 to 60.0
April's consensus for the ISM manufacturing index
is 58.7 vs 59.3 in March which was yet another month when order
readings for this sample were unusually strong. Delivery times have
been lengthening and input costs have been at an 8-year high, both
pointing to capacity constraints for this sample.
Construction Spending for March
Consensus Forecast, Month-to-Month Change: 0.5%
Consensus Range: 0.3% to 0.9%
After a marginal gain in February, construction spending
is expected to bounce a solid 0.5 percent higher in March. Spending on
single-family homes leads this report, offsetting weakness for
nonresidential spending.
Wednesday
ADP, Private Payrolls for April
Consensus Forecast: 193,000
Consensus Range: 165,000 to 225,000
ADP had been on a hot run until March employment
came in much weaker than expected, not far stronger than expected as
ADP forecast. The consensus for April's ADP estimate is 193,000 vs
241,000 in March.
Federal Funds Target for May 1 & 2 Meeting
Consensus Forecast, Midpoint: 1.625%
Consensus Range: 1.50% to 1.75%
No change in rates is the unanimous consensus of Econoday's sample for the May FOMC,
to hold at a mid-point 1.625 percent within a 1.50 to 1.75 percent
range. First-quarter weakness will likely be understated in the
statement as an anomaly with key emphasis to center on the outlook for
growth and whether inflation pressures are picking up.
Thursday
International Trade Balance for March
Consensus Forecast: -$50.0 billion
Consensus Range: -$57.8 to -$48.7 billion
The international trade deficit for goods and services
is expected to narrow sharply in March to $50.0 billion from February's
$57.6 billion, in line with advance data on the goods portion of the
balance. Imports of goods fell sharply in March while goods exports
continued their run of strength.
Initial Jobless Claims for April 28 week
Consensus Forecast: 220,000
Consensus Range: 220,000 to 229,000
Initial claims are expected to
come in at 220,000 in the April 28 week in what would be an 11,000
increase from the prior week which was a 49-year low. Low readings in
this report are consistent with strong demand for labor.
Nonfarm Productivity, 1st Estimate, 1st Quarter
Consensus Forecast, Annualized Rate: 0.9%
Consensus Range: 0.2% to 1.3%
Unit Labor Costs
Consensus Forecast, Annualized Rate: 3.0%
Consensus Range: 1.3% to 3.7%
Production rose modestly in the first quarter which is expected to limit nonfarm productivity to only a 0.9 percent annualized rate. Limited production gains point to a swelling in unit labor costs where the consensus is looking for a 3.0 percent increase.
PMI Services for April, Final
Consensus Forecast: 54.4
Consensus Range: 54.4 to 55.0
PMI services edged higher in the
flash for April and are expected to hold at a solid 54.4 in the final.
Order readings were the highlight of the flash report.
Factory Orders for March
Consensus Forecast, Month-to-Month Change: 1.3%
Consensus Range: 0.5% to 1.8%
The durable goods report for March showed headline strength which will give a boost to March factory orders
where the consensus is calling for a 1.3 percent gain. But some
details of the durables report were soft, especially capital goods
orders which are pointing to slowing in business investment.
ISM Non-Manufacturing Index for April
Consensus Forecast: 58.5
Consensus Range: 54.4 to 59.3
The ISM non-manufacturing index is expected to hold at a very strong rate of growth, at a consensus 58.5 in
April vs 58.8 in March. Delivery times have been lengthening and input
costs going up, both indicative of unsustainably strong growth for
ISM's sample.
Friday
Nonfarm Payrolls for April
Consensus Forecast: 190,000
Consensus Range: 152,000 to 255,000
Unemployment Rate
Consensus Forecast: 4.0%
Consensus Range: 3.9% to 4.1%
Private Payrolls
Consensus Forecast: 190,000
Consensus Range: 150,000 to 250,000
Manufacturing Payrolls
Consensus Forecast: 19,000
Consensus Range: 11,000 to 25,000
Participation Rate
Consensus Forecast: 62.9%
Consensus Range: 62.8% to 63.0%
Average Hourly Earnings
Consensus Forecast, Month-to-Month Change: 0.2%
Consensus Range: 0.2% to 0.3%
Average Hourly Earnings
Consensus Forecast, Year-on-Year Change: 2.7%
Consensus Range: 2.6% to 2.8%
Average Workweek
Consensus Forecast: 34.5 hours
Consensus Range: 34.5 to 34.5 hours
Following an unusually weak March, nonfarm payrolls are expected to resume much of their prior strength. April nonfarm payrolls are seen rising a very respectable 190,000. And movement is the call for the unemployment rate
which is expected to dip 1 tenth to 4.0 percent which would
increasingly point to full employment and the risk of wage inflation.
Yet wage pressures aren't expected to appear in April's report with the
monthly consensus for average hourly earnings at only 0.2 percent growth with the yearly rate seen holding steady at 2.7 percent. Private payrolls are expected to rise 190,000, the same as the nonfarm headline, with manufacturing payrolls expected to post another solid month, up 19,000. The workweek is seen unchanged at 34.5 hours and the labor participation rate coming in unchanged at 62.9 percent.
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