In a week shortened by the Memorial Day holiday, all eyes will be on the monthly employment report for May due on Friday.
Economists expect May nonfarm payrolls to show an increase of about 200,000 and for the unemployment rate to drop slightly to 8.9%
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Stubbornly high unemployment has been a thorn in the side of the U.S. economic recovery. The high jobless rate bleeds into virtually every other facet of the economy, affecting consumer spending, which makes up 70% of the U.S. economy, and cutting into another long-suffering sector, housing.
The modest improvements expected in the May numbers continue to confirm what economists said months ago -- the economic recovery is going to be a long, slow slog.
Other job-related economic indicators due next week include the ADP National Employment Report for May on Wednesday. Coming ahead of the government’s monthly job report, the ADP numbers frequently offer a preview of what’s likely to come.
Also due on Wednesday is the Challenger report on layoff intentions for May. While hiring has been spotty for months as companies question whether the economy is strong enough to expand, the number of companies actually slashing payroll has fallen, according recent Challenger reports. That trend is expected to continue in May.
Weather could play a role keeping weekly initial jobless claims at a high level. The report, due Thursday, could be impacted by the flooding of the Mississippi River and the tornadoes that have destroyed towns and wreaked havoc across the Midwest. Those natural disasters could impact jobless claims for several weeks to come.
The Conference Board’s Consumer Confidence Index for May is due Tuesday. Confidence is expected to have risen in May as political turmoil in Middle East has eased, lowering concerns for fuel shortages. Gasoline prices, soaring through most of the spring, leveled off ahead of the Memorial Day weekend and the unofficial kickoff of summer.
“There is some relief for consumers and retailers, since gasoline prices started falling in the latter part of May after briefly crossing over and then dipping below the $4 per gallon mark. This has boosted consumer confidence and will help increase spending as we enter the summer season,” said IHS Global Insight economist Chris Christopher.
Housing data in the form of the S&P/Case-Shiller Home Price Index for March is due Tuesday. Home values continue to decline due to bloated inventories. It’s a bit of a self-fulfilling prophecy as buyers delay purchases, hoping prices will fall even further. And prices continue to fall.
The severe weather could also affect economic reports due from the Institute for Supply Management, which will release its data for manufacturing and non-manufacturing on Wednesday and Friday, respectively. Flooding and tornadoes around the country have disrupted supply chains, making it harder for factories to distribute their goods.