Week Ahead: Inflation and Consumer Sentiment Data
Economic data tied to inflation and consumer sentiment will garner investors attention next week.
The past few weeks have brought a deluge of bad economic news related to housing, labor and manufacturing, and that isnt expected to change next week.
The May Producer Price Index, due for release on Tuesday, and the Consumer Price Index, set for release Wednesday, are widely watched inflation gauges. Both indexes are expected to show rising inflationary pressure due to soaring commodity prices.
The indexes probably wont show increases as large as in March and April, however, because fuel costs have leveled off somewhat, reducing prices at the gas pump. A month ago a gallon of gasoline was hovering near $4. Now its down to about $3.70.
The May data on retail and food sales are due Tuesday and the numbers are expected to be weak due to the unexpectedly soft labor market. In May the unemployment rate unexpectedly jumped to 9.1% and the number of jobs created fell precipitously from previous months. Fewer people working will undoubtedly eat into retail and food sales. In addition, the natural disaster in Japan has reduced car inventories in the U.S., which will cut into May car sales.
The June preliminary Reuters/University of Michigan Consumer Sentiment Index is due Friday. Forecasters believe consumer sentiment will be tied directly to the lower employment figures. If people feel they are less likely to find a job, or that their job may be in peril, they are less likely to spend money. Thats significant because consumer spending makes up about 70% of the U.S. economy.
The National Association of Home Builders/Wells Fargo Housing Market Index for June is due Wednesday. The housing sector has been slumping for months with no end in sight. The index will reflect that slump.
More housing reports are due Thursday with data tied to housing starts and building permits issued in May. The numbers have barely moved for nearly a year and that isnt expected to change.
Two manufacturing sector gauges are also due next week: the New York Federal Reserves Empire State Survey on Wednesday, and the Philadelphia Feds Business Outlook on Thursday. Once a beacon of light in an otherwise bleak economic landscape, manufacturing has also shown weakness recently.
Data related to May industrial production and capacity utilization is due Wednesday.