Quite a few interesting data releases are due out this week for the US economy. On Tuesday, Danske expect the retail sales report for April to show only modest gains, reflecting a major drag from the gasoline station component, as a result of the recent decline in gasoline prices. At the same time, we saw fairly weak chain store sales, indicating that we will only get a headline reading of 0.1%.
On Tuesday, core CPI is expected to remain modest, increasing 0.2 % m/m, whereas headline CPI is likely to be somewhat lower as a result of last month’s weakening in oil prices. This supports Danske’s view that the US will face only modest inflation going forward, allowing the Fed to focus on employment. If the weakness in employment figures seen over the past two months continues into the summer, this might prove increasingly pertinent. On the same note, the minutes from the April FOMC meeting are due to be released this week. However, since the meeting was followed by a press conference, Danske do not expect any major surprises.
The first figures for manufacturing confidence in May are due out in the form of local business surveys from New York and Philadelphia Fed. Danske expect them both to strengthen in line with the last ISM reading and last month’s drop in oil prices. The first-ever US release of Markit manufacturing flash PMI is due on 24 May. As in Europe, there will be a flash PMI released about seven to eight business days before the final PMI. The final PMI is scheduled to be released on the first business day of the month – i.e. the same day as the ISM. The PMI survey panel consists of more than 600 manufacturers compared with approximately 350 of the largest manufacturers for the ISM survey. Hence, going forward, this could be a significant market mover.
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