Looking Ahead: Week of May 28 to May 31

Market News International surveys between 15 and 20 Wall Street economists each week for their forecasts of economic indicators.

Tuesday

Personal income is predicted to increase a modest 0.3 percent in April after posting slightly higher increases in the two previous months. The April moderation is primarily due to a drop in hours worked and a smaller rise in average hourly earnings. (Forecast range: 0.1 to 0.5 percent) At the same time, personal consumption expenditures should post a 0.7 percent rise in April after increasing only 0.4 percent in March. Increases in motor vehicle sales are behind the expected hike. (Forecast range: 0.5 to 1.0 percent)

Market players are looking for existing home sales to dip 0.9 percent in April to a 5.35 million-unit rate. Historically, new home sales and existing home sales moved in the same direction month after month. In the past year, the normal pattern has been such that existing home sales fall with new home sales rise, and vice versa. In any case, broad trends show that the two still move together over time. Low mortgage rates continue to benefit the housing market. (Forecast range: 5.25 to 5.60 million-unit rate)

Economists are predicting that the Conference Board’s consumer confidence index will rise to 110.0 in May from a level of 108.8 in April. The mid-month figures for the University of Michigan’s consumer sentiment index had posted a modest gain and these two confidence measures tend to move in the same direction over time. (Forecast range: 102.5 to 112.0)

Thursday

Economists are predicting that new jobless claims will decline 6,000 in the week ended May 25 from last week’s level of 416,000. Labor Department officials believe that the federal re-filing program is no longer impacting the weekly claims data. (Forecast range: -10,000 to +4,000)

Friday

Nonfarm business productivity is predicted to grow at a whopping 8.4 percent rate in the first quarter given the strong showing in real GDP and the less than stellar performance in employment during the first quarter. This would be a modest downward revision from the initial estimate. Healthy productivity gains allow wage increases without inflationary pressures. (Forecast range: 8.2 to 9.0 percent) At the same time, unit labor costs are expected to decline at 5.1 percent rate after decreasing at a 2.7 percent rate in the fourth quarter. This is also a slight downward revision from the initial estimate. (Forecast range: -5.8 to –4.7 percent)

Economists predict that the University of Michigan’s consumer sentiment index will increase to 95.7 for the month of May. The final figure is usually similar to the mid-month estimate. (Forecast range: 94.5 to 96.0)

The NAPM-Chicago Index, also known as the Chicago Purchasing Managers Index, is expected to edge up to 55 in May from a level of 54.7 in April. This means that the manufacturing sector continues in its expansion mode. (Forecast range: 54.0 to 56.5)

Factory orders are predicted to rise 0.8 percent in April after gaining 0.4 percent in March. The expected rise incorporates the 1.1 percent increase posted for durable goods. This bodes well for industrial production. (Forecast range: 0.3 to 1.7 percent)