Key U.S. Data Releases This Week

This week will be light on major releases. The key report will be the trade balance (Friday), for which we are projecting an improvement, with real goods exports probably up slightly, but imports still falling. After four consecutive monthly increases, the Reuters/University of Michigan's Index of Consumer Sentiment (also on Friday) is expected to take a small step backward in early July because of rising gasoline prices and job losses. Finally, the ISM index for services (Monday) is expected to move up, given that stock markets moved up in June, while risk spreads narrowed.

KEY U.S. DATA RELEASES THIS WEEK

Monday, July 6 – ISM Non-Manufacturing Report (June)

• IHS Global Insight: 47.5
• Consensus: 46.0
• Last Actual: 44.0 (May)

What to Look For

• The ISM index for services is expected to move up by about 3.5 points for June, to 47.5.

Implications

Financial markets and financial services continued to improve in June, as equity markets rose, banks issued new capital, and risk spreads continued to edge downwards. But freight activity continued to decline, with inventories remaining under downward pressure.

Friday, July 10 – Trade Balance (May)

• IHS Global Insight: -$28.0 Billion
• Consensus: -$30.0 Billion
• Last Actual: -$29.2 Billion (Apr.)

What to Look For

• We expect to see a small decline in the trade deficit in May, to $28.0 billion, from $29.2 billion in April.

Implications

In April, there was a much steeper drop in real goods exports (down 4.3%) than in real goods imports (down 2.7%), and we expect to see a correction for May, with real goods exports probably up slightly, but imports still falling. Increased aircraft exports should help. Working in the opposite direction, the bill for imported oil should increase, although the impact of higher oil prices will be dampened by a reduction in the volume of oil imports. In the second half of the year, we expect to see imports reviving before exports, as the U.S. economy begins to recover ahead of most of the rest of the world.

Friday, July 10 – Michigan Consumer Sentiment Index (Preliminary July)

• IHS Global Insight: 69.5
• Consensus: 71.0
• Last Actual: 70.8 (Final June)

What to Look For

After four consecutive monthly increases, the Reuters/University of Michigan's Index of Consumer Sentiment is expected to take a small step backward in early July.

Implications

Falling employment and rising gasoline prices are hurting real income growth, while the stock market rally that boosted spirits this spring has flattened out. Led by a pickup in auto sales, real consumer spending is expected to grow at a modest 1.9% annual rate in the third quarter.