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Key U.S. Data Releases and Events

2 May 08

This upcoming week will be light on economic releases. The Bureau of Labor Statistics will release another set of lackluster productivity numbers, and the Census Bureau will release its March trade report.

Financial markets are still stressed, but have calmed down somewhat since Bear Stearns imploded in early April. The Dow Jones Industrial Average rose for the third straight week, climbing above 13,000 for the first time since January 3. The markets were encouraged by two key data releases that were hardly strong, but were not as bad as they might have been. The advance GDP report show that the economy just kept its head above water in the first quarter, growing 0.6%. Growth was positive only because firms began adding to their inventories again; final sales actually fell. April's employment report showed that the deterioration in the labor market is not accelerating, as the economy lost "only" 20,000 jobs, the smallest decline so far this year. But the week's key event was the Fed lowering the federal funds rate by 25 basis points, bringing it down to 2.0%. In the press release, the Fed removed its "downside risks to growth remain" reference, signaling a pause in its rate-cutting campaign. The small job loss in April will encourage the Fed that it was right to signal a pause.

This upcoming week will be light on economic releases. On May 7, the Bureau of labor Statistics will release another set of lackluster productivity numbers. On May 9, the Census Bureau will release its March trade report, which should show a slight narrowing in the trade deficit.

KEY U.S. DATA RELEASES THIS WEEK

Monday, May 5 – ISM Nonmanufacturing Index (Apr.)

Global Insight: 49.4
Consensus: 49.5
Last Actual: 49.6 (Mar.)

What to Look For

The April ISM index for nonmanufacturing services likely declined by 0.1 percentage point, to 49.4.

Implications

Looking forward, mixed conditions in the services industry should persist for several more months.

Wednesday, May 7 – Productivity (Preliminary Q1)

Nonfarm Business Productivity
Global Insight: +1.3%
Consensus: +1.6%
Last Actual: +1.9% (Final Q4)

Unit Labor Costs
Global Insight: +2.8%
Consensus: +2.5%
Last Actual: +2.6% (Final Q4)

What to Look For

Labor productivity rose an estimated 1.3% in the first quarter, on a 0.4% increase in output and a 0.9% drop in hours.
Unit labor costs likely increased 2.8%, on a 4.1% jump in hourly compensation and a 1.3% gain in productivity.

Implications

Cyclical forces are keeping productivity growth down. But trend productivity growth is also down. Year-on-year, unit labor costs are rising about 0.5%. Wage inflation is not a problem at this time.

Friday, May 9 – Trade Balance (Mar.)

Global Insight: -$62.0 Billion
Consensus: -$61.4 Billion
Last Actual: -$62.3 Billion (Feb.)

What to Look For

We expect the trade deficit to narrow slightly in March, to $62.0 billion, from $62.3 billion in February, with both exports and imports down slightly from February.
Outside of aircraft, exports should continue to do well.
On the import side, we expect declines in capital goods, autos, and consumer goods.
Sharply higher oil prices will increase the value of petroleum imports, but that will be partly offset by lower oil import volumes.

Implications

The underlying picture remains that foreign trade is providing strong support for the U.S. economy, largely through solid export gains that reflect robust growth overseas and a highly competitive dollar.

by Patrick Newport and Nigel Gault

U.S. Macroeconomic Services

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