The June 13 week is packed with first-tier US economic data, and comes shortly in advance of the next FOMC meeting. Thus, the Committee will have some fresh information to gauge conditions at the mid-point in the second quarter 2011. The current batch of softer data is expected to give way to stronger growth in the second half of the year, but policymakers are still characterizing the recovery as sluggish or sub-par.
The May data on retail and food sales on Tuesday leads off the major reports for the week. The numbers are likely to look soft due to slowing rises in gasoline prices that will moderate the pace service station sales, and the declines in motor vehicle sales that were in part from limited inventories of the most sought-after models. Other types of retailers may have a somewhat better performance. At this time of year sales generally increase for building materials and gardening equipment. Warm weather probably means that seasonal merchandise did well at department and apparel stores. The release of some new games for the most popular consoles should have helped at electronic specialty stores. Slow activity in housing probably restrained sales of household appliances and furniture.
The May Producer Price Index will be released on Tuesday and the Consumer Price Index is set for Wednesday. The back-to-back inflation reports will be influenced by the same factors. Moderation in some food prices and for fuels will likely mean that the headline numbers will see smaller increases this month after some fairly sharp rises in March and April. Outside of food and energy, gains in other commodities will be less visible as well. There may be some upside risks to prices for motor vehicles as demand for fuel-efficient passenger cars was higher even as supplies were smaller.
The release of the June preliminary Reuters/University of Michigan Consumer Sentiment Index on Friday may signal some improvement in...Read more
