NEWS / Foreign Exchange

Personal Income, Manufacturing ISM, Productivity, Nonfarm Payroll

Personal Income & Spending. (March, Monday 8.30 am)

Forecast: 0.5, 0.5% Consensus: 0.5, 0.5% Prior: 0.6, 0.6%

We expect personal spending to post a 0.5% gain influenced by solid employment and income gains, but also by higher gasoline prices. Prices at the pump probably inflated PCE prices by 0.5% in March. Excluding energy, PCE inflation could have moderated to 0.1% from 0.3% in February. This is equivalent to a 2.2% year-over-year inflation from 2.4% in February. As the latest Inflation Observatory indicated, 12-month core inflation is beginning to ease steadily because rental components ??“the biggest source of pressure- appears to be moderating and will continue doing so as housing affordability improves and consumers shift back from renting to buying. Pressures would also diminish as economic growth moderates and creates some slack in the labor market.

Manufacturing ISM (April, Tuesday, 10.00 am)

Forecast: 51.5 Consensus: 51.0 Prior: 50.9

We expect the ISM Index to increase slightly in April favored by a modest contribution of new orders and production sub-indexes, which would be partially offset by a negative contribution from employment. Inventories will subtract less to the overall index. Recently, the inventories sub-index appears to be recovering after falling for several months. The ISM index has been moving downwards in tandem with the observed deceleration in manufacturing activity.

Productivity & Unit Labor Costs (Q107, prel., Thursday, 8.30 am)

Forecast: 0.8, 4.2% Consensus: 1.1, 3.9% Prior: 1.5, 6.6%

Output per hour eased driven by lower economic expansion in Q107. We expect productivity growth to stand at 0.8% from 1.5% in Q406. This is equivalent to a 0.8% year-over-year increase, which is well below the long-term average of 2-2.5%. Labor compensations could have moderated in Q107. According to the Establishments Survey, average hourly earnings rose 4.1% in the quarter, the same rate as in Q406. The growth of Unit Labor Costs would moderate from 6.6% in Q406 to 4.2% in Q107, 2.2% higher than the level of a year earlier. Labor costs are likely to ease in coming quarters boosted by a decelerating economy.

Nonfarm Payroll & Urate (April, Friday 8.30 am)

Forecast: 125K, 4.5% Consensus: 100K, 4.5% Prior: 180K, 4.4%

Employment creation would moderate in April as suggested by high frequency data. The four-week moving average of unemployment insurance claims increased for three consecutive weeks, standing at 332,000 in the week ending April 19, the highest reading in six weeks. We expect total non-farm payroll to expand by 125,000 new jobs in April, 55,000 jobs less that in the previous month. Construction is likely to add jobs for the second straight month in face of the springbuying season. The unemployment rate would rise to 4.5% from 4.4% in March, still reflecting tightness in the labor market.