The Business News Week Ahead

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.