Key U.S. Data Releases and Events

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, May 12 – Trade Balance (Mar.)

• IHS Global Insight: -$28.0 Billion
• Consensus: -$29.1 Billion
• Last Actual: -$26.0 Billion (Feb.)

What to Look For

• We expect the trade deficit to widen slightly, from $26.0 billion in February to $28.0 billion in March.

Implications

This would be the first increase in the trade gap since July. Higher oil prices are expected to drive the oil import bill higher, and anticipate that the headlong decline in import volumes of recent months will slow down. Exports should slip back after their bounce in February. Looking forward, we do not expect trade to be a key driver of U.S. growth. The United States is likely to recover sooner than most of its trading partners, so we expect the trade deficit to widen over the rest of the year as imports revive before exports.

Wednesday, May 13 – Retail Sales (Apr.)

Total

• IHS Global Insight: +0.3%
• Consensus: 0.0%
• Last Actual: -1.2% (Mar.)

Less Autos

• IHS Global Insight: +0.7%
• Consensus: 0.0%
• Last Actual: -1.0% (Mar.)

What to Look For

• Sales increased 0.3% in April, retracing part of their 1.1% March decline.
• Excluding autos, the results should be more encouraging—a 0.7% advance.

Implications

Unit sales of light vehicles fell from an annual rate of 9.8 million in March to 9.3 million in April, held back by job losses, tight credit conditions, and uncertainty over the future of GM and Chrysler. In sharp contrast, a strong month-to-month gain in chain-store sales signals solid growth in April sales at general merchandise and specialty stores, after a disappointing March. The fiscal stimulus package, large tax refunds, a big cost-of-living adjustment for Social Security, and declining energy prices are supporting real household incomes and spending. In addition, we suspect that the late timing of Easter hurt sales in March, so that some positive payback is due in April.

Thursday, May 14 – Producer Price Index (Apr.)

Total

• IHS Global Insight: 0.0%
• Consensus: 0.1%
• Last Actual: -1.2% (Mar.)

Core

• IHS Global Insight: 0.0%
• Consensus: 0.1%
• Last Actual: 0.0% (Mar.)

What to Look For

• Top-level index should be unchanged in April.
• Core index is expected to be about flat.

Implications

Gasoline spot prices rose quicker than their typical seasonal rate, but falling natural gas and electricity prices likely dragged the energy category slightly lower. Food prices probably rose to offset the energy decline, though. Excluding food and energy, core producer prices should remain flat. With the economy still contracting and producers eager to shed inventory, orders for durable goods and capital equipment remain weak, effectively eliminating pricing power.

Friday, May 15 – Consumer Price Index (Apr.)

Total

• IHS Global Insight: -0.1%
• Consensus: 0.0%
• Last Actual: -0.1% (Mar.)

Core

• IHS Global Insight: +0.1%
• Consensus: +0.1%
• Last Actual: +0.2% (Mar.)

What to Look For

• The top-level index is expected to fall 0.1% in April.

Implications

Fluctuations in energy prices continue to dictate the movement of the headline CPI. Seasonally adjusted, retail gasoline prices fell roughly 3%. This expected decline, in conjunction with declines in fuel oil, natural gas, and electricity, will likely drag the energy category 2% lower. Excluding food and energy, core consumer prices are projected to increase a modest 0.1%—a soft gain, but not deflation

Friday, May 15 – Industrial Production (Apr.)

• IHS Global Insight: -0.8%
• Consensus: -0.5%
• Last Actual: -1.5% (Mar.)

What to Look For

• Overall production declined by 0.8%, with few distortions from weather or motor vehicle industry anomalies.

Implications

The core manufacturing sector slipped, but less steeply than in recent months, as indicated in the ISM manufacturing survey. Hours worked in manufacturing confirmed this by falling half as fast in April as in the prior two months. Manufacturing output is still going to slide more than 15% from a year earlier, for the worst 12-month drop since 1946.

Friday, May 15 – Michigan Consumer Sentiment Index (Preliminary May)

• IHS Global Insight: 69.0
• Consensus: 66.0
• Last Actual: 65.1 (final, Apr.)

What to Look For

• The Reuters/University of Michigan Index of Consumer Sentiment is expected to rise from 65.1 in April to 69.0 in early May, its highest level since last September.

Implications

The stock market rally has made consumers more optimistic about their personal finances, countering the discouraging news of rising unemployment. Despite the gains, sentiment is still in a low range; from 1999 to 2008, this index averaged 90.0. With job losses mounting, we expect that real consumer spending will hold steady in the second quarter, before growth resumes at a gradual pace during the second half of 2009.