RTTNews - The jobs data gave a moderate degree of relief at least, as the May report revealed smaller-than-expected job losses. The previous months' figures were revised higher to add 82,000 jobs. May marked the fourth consecutive month when job losses moderated. The pace of job losses in the construction sector declined to 59,000 following four months of triple digit losses. The financial and retail sectors also showed a moderation in the rate of job declines, while the education and health sector added 44,000 jobs, which can be termed as above the recent trend.

Meanwhile, the other details were mixed. The jobless rate rose to 9.2% to its highest level since August 1983 and average hourly earnings were up a mere 0.1%, which does not bode well for consumer spending in May.

The weekly jobless claims report is continuing to show a slow improvement. The first time claims for unemployment benefit fell 4,000 to 621,000 in the recent reporting week, marking the fifth decline in six weeks. For the first time since early January, continuing claims fell, dropping 4,000 to 631,250.

The U.S. non-farm productivity report showed that non-farm productivity rose at a 1.6% rate in the first quarter, an upward revision from the 0.8% growth estimated initially. Annually, non-farm productivity was up 1.9%. Compensation per hour in the non-farm sector rose 4.6% quarter-over-quarter compared to a 7.1% increase in real compensation. Meanwhile, unit labor costs rose 3% in the first quarter compared to the previous quarter and climbed 2.2% compared to last year.

The revised increase in productivity largely reflects a revision in output growth. Businesses seem to be producing more with less people, which is important for stimulating economic growth.

Consumers are still wary. The personal income and outlays report showed that personal spending fell 0.1% in April. Meanwhile, personal income climbed 0.5%, with the increase in the recent month fueled by gains in transfer payments, which benefited from the government's stimulus plans. However, worker compensation also rose slightly to record its first gain in eight months. The core PCE price index was up 0.3% on a monthly basis and climbed 1.9% from a year-ago. As expected, reflecting caution among consumers, the savings rate rose to 5.7%, marking the highest rate since 1995.

Housing reports pointed to some light at the end of the tunnel. Construction spending rose 0.8% month-over-month in April, according to a report released by the Commerce Department. Private non-residential construction rose 1.8%, helping to offset the weakness in single-family and multi-family housing construction spending, which fell 6.7% and 2.6%, respectively. Public construction spending was down 0.3% in April.

The National Association of Realtors said its pending home sales index rose 6.7% month-over-month in April, while economists had expected a mere 0.5% increase. The increase comes on the back of a 3.2% monthly gain in March and a 2% increase in February. The Northeast and the Midwest led the gains, showing increases of 32.6% and 9.8%, respectively. On an annual basis, the pending home sales index rose 3.3%.

While the ISM's manufacturing survey showed a slowdown in the rate of contraction, the services sector survey showed a slower than expected improvement. The services sector purchasing managers' index came in at 44 in May compared to the expected reading of 45 and the month-ago's 43.7. The business activity index declined 3 points to 42.4. On the other hand, the new orders index declined to 44.4 in May from 47 in the previous month and the index of backlog of orders moved down to 40. On an encouraging note, the employment index moved to its highest level since October despite its meager 2 point-increase.

Last week, the Commerce Department said factory goods orders rose 0.7% month-over-month in April, smaller than the 0.9% gain expected by economists. The March reading was revised down to show a 1.9% monthly decline as opposed to the 0.9% decline estimated originally.

Amid an increase in the uncertainty over the itinerary for a recovery, traders are likely to anxiously look forward to the unfolding week for taking stock of the economic situation. The Commerce Department's retail sales report for May and the preliminary June reading of the Reuters/University of Michigan's consumer sentiment report, the weekly jobless claims report of the Labor Department and the Beige Book are likely to be the closely watched reports of the week.

Additionally, traders are likely to stay tuned to the Commerce Department's trade balance report for April, the Labor Department import and export prices for May, the Commerce Department's business and wholesales inventories reports for April and the Energy Department's crude oil inventories report.

Retail sales performance this year has so far been mixed. After rising in the first two months of the year, retail sales have been on a declining mode in the next two months and consequently, retail sales are up only about 0.4% thus far this year. State Street Advisors point out that the declines of the current year is better than the severe pullback in retail sales in the second half of 2008.

Difficult labor market conditions, accentuated by a rise in the jobless rate to over 9% in May, tight credit conditions and higher gasoline prices are likely to keep consumer spending subdued in the near term. However, a pick up in light vehicle sales could lead to a decent gain in retail sales in May.

The trade balance report is expected to show a widening of the deficit in April, mainly due to an increase in crude oil imports, reflecting the increase in crude oil prices. However, non-oil import is expected to narrow slightly due to an increase in exports from the U.S. ports.


There are no major economic reports due out on Monday.


The Commerce Department is due to release its wholesale inventories report at 10 AM ET on Tuesday. Economists expect wholesale inventories at the end of April to show a 1% decline.

In March, wholesale sales declined 2.4% month-over-month to $310.9 billion from the revised February rate. On a year-over-year basis, wholesale sales declined 18.1%. Sales of March durable goods declined 3.3% on a monthly basis, while sales of non-durable goods fell 1.6%. Meanwhile, wholesale inventories were down 1.6%, with the inventories to sales ratio at 1.32 compared to the year-ago's 1.12.


Chicago Federal Reserve Bank President Charles Evans is schedule to speak on the current crisis before the Executives Club of Chicago Joint Committee in Chicago at 8 AM ET on Wednesday.

The trade gap data for April is due out at 8:30 AM ET on the same day. Economists estimate that the trade gap widened to $28.7 billion in the month. The trade gap measures the difference between imports and exports of both tangible goods and services.

The U.S. trade deficit narrowed to $27.6 billion from a revised deficit of $26.1 billion in February. Economists had estimated a widening in the deficit to $29 billion in the month from the originally reported deficit of $26.1 billion for February.

The March exports were down $3 billion to $123.6 billion, while imports fell $1.6 billion to $151.2 billion. The goods deficit increased $1.2 billion to $38.4 billion, while the services surplus eased $0.2 billion to $10.8 billion.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended May 1st at 10:30 AM ET on the same day.

The oil inventory report for the week ended May 29th that showed a 2.9 million barrel-increase in crude oil stockpiles to 366 million barrels. Inventories were now above the upper boundary of the average range.

However, gasoline inventories fell by 0.2 million barrels and were below the lower limit of the average range. On the other hand, distillate stockpiles increased by 1.6 million barrel and remained above the upper boundary of the average range. Refinery capacity utilization averaged 84.2% over the four-weeks ended May 29th compared to 84% in the previous week.

The Federal Reserve is due to release its Beige Book, which is a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 PM ET on the same day. The report is normally released about two weeks before the monetary policy meeting is held.


Retail sales of food and retail companies with one or more establishments that sell merchandise and associated services to final consumers are slated to be released at 8:30 AM ET on Thursday. Economists estimate a 0.3% increase in the retail sales for May, while they estimate that retail sales, excluding autos, rose 0.2% in the month.

In April, retail sales edged down 0.4% month-over-month following a downwardly revised 1.3% decline in March. Economists had estimated retail sales to have remained unchanged in April.

Sales, excluding autos, fell 0.5% in April, adding to the downwardly revised 1.2% decline in the previous month. Economists had estimated retail sales, excluding autos, to have risen 0.2% in the month. Sales at motor vehicle & part dealers rose 0.2% compared to the previous month and they declined 20.7% from the year-ago period.

Sales at electronics & appliance stores fell 2.9% compared to a 7.8% decline in the previous month. Sales at gasoline station sales slipped 2.3% compared to a 3.2% drop witnessed in the previous month.

The Labor Department is due to release its customary jobless claims report for the week ended May 2nd at 8:30 AM ET on the same day.

Initial jobless claims came in at 621,000 for the week ended May 23. This was down 4,000 from a revised mark of 625,000 in the previous week. The 4-week moving average of initial claims, a statistic that flattens out week-to-week fluctuations in the data, increased to 631,250 from the revised mark of 627,250 seen in the previous week.

Continuing claims, which measures the number of people receiving ongoing unemployment help, declined from record high levels. The statistic fell 15,000 to 6.735 million.

The Commerce Department is scheduled to release its business inventories report for April at 10 AM ET on the same day. The report summarizes the results from the monthly retail trade, wholesale trade and factory goods orders surveys. The report is expected to show a 1% decline in business inventories for the month.

Business inventories fell 1% month-over-month in March. Annually, inventories were down 4.8%. Meanwhile, business sales moved down 1.6% month-over-month and receded 15.6% compared to the previous year. Consequently, the business inventories to sales ratio was steady at 1.44, although it was higher than the 1.28 in the year-ago period.

Atlanta Federal Reserve Bank President Dennis Lockhart is due to deliver a speech on the economy before National Association of Securities Professionals annual conference in Atlanta at 1:05 PM ET on Thursday.


The export & import price indexes for April, which gives the changes in the prices of non-military goods and services traded between the U.S. and the rest of the world, are due out at 8:30 AM ET on Friday.

Import prices rose 1.6% month-over-month in April compared to a revised 0.2% growth in the previous month. The increase reflected a 15.4% increase in petroleum import prices. On a year-over-year basis, import prices were down 16.3%.

Export prices rose at a 0.5% rate in April compared to a 0.7% decline in March. Agricultural export prices climbed 3.6% compared to a 0.3% decline in export prices of non-agricultural commodities. On a year-over-year basis, export prices declined 6.8%.

The Reuters/University of Michigan's preliminary report on the consumer sentiment index for June is scheduled to be released at 10 AM ET on the same day. Consumer confidence is expected to remain almost flat in the month, with economists forecasting a value of 68.6, little change from the previous month's 68.7.

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