The Business News Week Ahead

A week shortened by Monday's Memorial Day is expected to show spots of economic strength but not very much inflation at all. Case-Shiller opens the week on Tuesday and slowing in year-on-year home appreciation is the call. But strength is the expectation for Tuesday's other releases, consumer confidence and especially for the Dallas Fed manufacturing report where forecasters see acceleration at high levels. The second estimate for first-quarter GDP comes out Wednesday in a report that probably won't offer any surprises but may well offer a reminder that consumer spending flopped at the start of the year. And the first major inputs into second-quarter GDP arrives on Thursday with expectations calling for only a moderate gain in April consumer spending and barely any gain at all for core PCE prices. The week's other major inflation gauge, average hourly earnings, are also not expected to show much life in a Friday employment report where solid job growth is otherwise the consensus. Friday also includes construction spending, where a sharp bounce back gain is expected, and unit vehicle sales which are expected to hold at a modest-to-moderate growth rate.

Tuesday

Case-Shiller, 20-City Adjusted Index for March

Consensus Forecast, Month-to-Month Change: 0.7%

Consensus Range: 0.6% to 0.8%

Case-Shiller, 20-City Unadjusted Index

Consensus Forecast, Month-to-Month Change: 0.5%

Consensus Range: 0.2% to 0.6%

Case-Shiller, 20-City Unadjusted Index

Consensus Forecast, Year-on-Year Change: 6.4%

Consensus Range: 6.3% to 7.0%

The Case-Shiller 20-city index had been pushing toward 7 percent annual growth, at 6.8 percent in the last report for February. But after significant slowing in FHFA's March data, forecasters do not see extending strength for Case-Shiller's year-on-year rate with the consensus at 6.4 percent. Yet monthly estimates are solid, up 0.7 percent for the adjusted rate and up 0.5 percent for the unadjusted rate.

Consumer Confidence Index for May

Consensus Forecast: 128.1

Consensus Range: 125.5 to 130.0

Most confidence readings, whether for consumers or businesses, have been topping off but not the consumer confidence index which forecasters, at a May consensus of 128,1, see holding onto this year's gains. This index began to test the 130 level back in February on the strength of employment assessments and income prospects.

Dallas Fed General Activity Index for May

Consensus Forecast: 23.2

Consensus Range: 20.0 to 27.0 

Regional factory surveys have been strong so far in May and another month of exceptional growth is the call for the Dallas Fed's report. Forecasters see the general activity index firming slightly to a consensus 23.2 vs 21.8 in April. Orders have been very strong in this sample accompanied, however, by signs of capacity stress including rising utilization and a multi-year high for input costs.

Wednesday

ADP, Private Payrolls for May

Consensus Forecast: 186,000

Consensus Range: 180,000 to 225,000

Econoday's consensus for ADP's private payroll estimate in May is 186,000 which would compare with 204,000 in ADP's April estimate and against 168,000 in the government's data for April. ADP has been running far stronger than actual payrolls.

Real GDP: 1st Quarter, 2nd Estimate, Annualized Rate

Consensus Forecast: 2.2%

Consensus Range: 2.1% to 2.6%

Real Consumer Spending, Annualized Rate

Consensus Forecast: 1.2%

Consensus Range: 1.1% to 1.2%

GDP Price Index

Consensus Forecast: 2.0%

Consensus Range: 2.0% to 2.0%

The second estimate for first-quarter GDP is expected to come in at a 2.2 percent annualized rate vs 2.3 percent in the first estimate. The contribution from inventory growth may be pulled back offset by a possible upgrade to consumer spending where expectations are looking for a 1.2 percent rate vs the first estimate's 1.1 percent rate. The GDP price index is seen unchanged at a 2.0 percent rate.

International Trade In Goods for April

Consensus Forecast, Month-to-Month Change: -$71.0 billion

Consensus Range: -$73.7 to -$68.0 billion

The goods deficit is expected to widen to a consensus $71.0 billion in April vs $68.3 billion in March (revised from an initial $68.0 billion). April's report will offer the first indications on second-quarter net exports and possible updates on tariff effects and the bilateral deficit with China.

Wholesale Inventories for April

Consensus Forecast, Month-to-Month Change: 0.3%

Consensus Range: 0.2% to 0.5%

Wholesale inventories are expected to rise 0.3 percent in April following a 0.3 percent build in March and a large 0.9 percent build in February. Inventories in this sector have been climbing but so have sales.

Beige Book

Prepared for the June 12 & 13 FOMC Meeting

The long refrain of "modest-to-moderate" economic growth was once again the assessment of all 12 districts in the Beige Book for May. Tariffs were the feature of the last report with warnings that "dramatic" increases in metal prices were being passed through to customers. Yet for inflation as a whole, the verdict was once again "modest-to-moderate." Yet any upgrades in this report, whether for employment or inflation, would heighten rate-hike expectations.

Thursday

Initial Jobless Claims for May 26 week

Consensus Forecast: 224,000

Consensus Range: 217,000 to 230,000

Initial claims are expected to come in at 224,000 in the May 26 week in what would be a 10,000 decrease from 234,000 in the prior week. The 4-week average in the prior week, at 219,750, is just off a 49-year low.  Low readings in this report are consistent with strong demand for labor.

Personal Income for April

Consensus Forecast, Month-to-Month Change: 0.3%

Consensus Range: 0.2% to 0.5%

Consumer Spending

Consensus Forecast, Month-to-Month Change: 0.3%

Consensus Range: 0.2% to 0.5%

PCE Price Index

Consensus Forecast, Month-to-Month Change: 0.2%

Consensus Range: 0.2% to 0.4%

PCE Price Index

Consensus Forecast, Year-on-Year Change: 2.0%

Consensus Range: 2.0% to 2.2%

Core PCE Price Index

Consensus Forecast, Month-to-Month Change: 0.1%

Consensus Range: 0.1% to 0.3%

Core PCE Price Index

Consensus Forecast, Year-on-Year Change: 1.8%

Consensus Range: 1.8% to 2.1%

Personal income is seen rising a moderate 0.3 percent in April while consumer spending, in what will be the first major input into second-quarter GDP, is also expected to increase 0.3 percent. The core PCE price index, which excludes both food and energy and which is the most closely watched of all inflation readings, is seen rising very marginally, only 0.1 percent higher on the month for yearly deceleration to 1.8 percent vs March's 1.9 percent.

Chicago PMI for May

Consensus Forecast: 58.1

Consensus Range: 56.6 to 59.4 

Easing in orders helped pull down the Chicago PMI to 57.6 in April in what, especially for this sample, was probably a blessing given deepening signs of capacity stress that included a 7-1/2 year high for input costs. Scarcity of steel, following tariffs, was a tangible factor for this sample in April. For May's result, forecasters see the index rising slightly to 58.1.

Pending Home Sales Index for April

Consensus Forecast, Month-to-Month Change: 0.7%

Consensus Range: 0.3% to 1.0%

Pending home sales are expected to increase 0.7 percent in April after rising 0.4 percent rise in March. More homes have been coming into the market which has been a plus for resales where trends, however, remain flat.

Friday

Nonfarm Payrolls for May

Consensus Forecast: 185,000

Consensus Range: 155,000 to 215,000

Unemployment Rate

Consensus Forecast: 3.9%

Consensus Range: 3.9% to 4.0%

Private Payrolls 

Consensus Forecast: 185,000

Consensus Range: 150,000 to 205,000

Manufacturing Payrolls 

Consensus Forecast: 18,000

Consensus Range: 8,000 to 25,000

Participation Rate

Consensus Forecast: 62.8%

Consensus Range: 62.8% to 62.9%

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 a solid April, nonfarm payrolls are expected to extend their strength to May where Econoday's consensus is calling for a 185,000 rise. The unemployment rate, down 2 tenths to 3.9 percent, was the highlight of the April report with May's rate seen holding at 3.9 percent. A surprise in the April report was a lack of wage pressures and only marginally higher readings are expected for May, at 0.2 percent for monthly growth in average hourly earnings and a 1 tenth climb in the year-on-year rate to 2.7 percent. Private payrolls are also expected to rise 185,000 with manufacturing payrolls seen increasing 18,000. The workweek is seen unchanged at 34.5 hours and the labor participation rate slipping 1 tenth in the month to 62.8 percent.

PMI Manufacturing for May, Final

Consensus Forecast: 56.6

Consensus Range: 56.6 to 57.0

The PMI manufacturing index is expected to come in at a final of 56.6 in May, unchanged from the mid-month flash. 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 May

Consensus Forecast: 58.4

Consensus Range: 57.5 to 60.0

Forecasters see new acceleration for the ISM manufacturing index, to 58.4 vs 57.3 in an April report that however did show another month of strong growth for new orders. Input costs and delivery delays are at rare highs consistent with capacity stress for this sample.

Construction Spending for April

Consensus Forecast, Month-to-Month Change: 0.8% 

Consensus Range: 0.5% to 2.0%

Construction spending is often a very volatile report, swinging lower in March and expected to swing back higher in April, at a consensus 0.8 percent gain. Spending on single-family homes fell back in March with non-residential spending holding steady.

Total Unit Vehicle Sales for May

Consensus Forecast, Annualized Rate: 17.1 million

Consensus Range: 16.6 to 17.3 million

Domestic-made Unit Vehicle Sales

Consensus Forecast, Annualized Rate: 12.8 million

Consensus Range: 12.7 to 13.1 million

A 17.1 million annualized rate is the consensus for unit vehicle sales in May, a respectable outcome that would compare with 17.2 million in April and hint at a constructive month for retail sales and consumer spending in general.