Key U.S. Data Releases and Events

Federal Reserve chairman Ben Bernanke will provide testimony to the Joint Economic Committee of Congress on Tuesday. We do not expect Bernanke to stray too far from the recent FOMC press release, where the Fed remained committed to full throttle on monetary policy. There may be some Q&A on the disjointed functioning of the credit markets and the obstacles that banks—particularly the recipients of TARP funds—are facing with re-booting their lending activity.

The major economic release next week will come on Friday, with the release of the April employment report. Despite a rash of recent positive indications about reduced downward pressure on the economy, labor markets are still struggling and we expect a large 625,000 decline in employment. That might add a dose of sobriety to the recent positive spin in the markets. Construction spending is expected to have declined in March, but the ISM index for nonmanufacturing industries is expected to rebound by several points.

KEY U.S. DATA RELEASES THIS WEEK

Monday, May 4 – Construction Spending (Mar.)

Construction Put in Place

• IHS Global Insight: -1.7%
• Consensus: -1.5%
• Last Actual: -0.9% (Feb.)

Construction Excl. Residential Improvements

• IHS Global Insight: -2.0%
• Last Actual: -1.3% (Feb.)

What to Look For

• Construction spending is expected to decline by 1.7%.

Implications

Good weather pumped up some of the February construction numbers. More-normal weather will help bring the March numbers down. We are expecting negative numbers from all three construction categories. Single-family residential spending should drop more than 7%, declining for the 37th-straight month; excluding improvements, spending will drop 2.0%.

Tuesday, May 5 – ISM Nonmanufacturing Index (Apr.)

• IHS Global Insight: 43.8
• Consensus: 42.0
• Last Actual: 40.8 (Mar.)

What to Look For

• The ISM index for nonmanufacturing industries is expected to move up about 3 points in April, to a level of 43.8.

Implications

Employment market conditions improved slightly, but there was still downward pressure on production, inventories, and shipments. Conditions in financial markets improved substantially, though, with lower risk spreads and stronger equity markets.

Friday, May 8 – Friday, April 3 – Employment Report (Apr.)

Nonfarm Payrolls

• IHS Global Insight: -625,000
• Consensus: -610,000
• Last Actual: -663,000 (Mar.)

Unemployment Rate

• IHS Global Insight: 8.9%
• Consensus: 8.9%
• Last Actual: 8.5% (Mar.)

Average Hourly Earnings

• IHS Global Insight: +0.2%
• Consensus: +0.2%
• Last Actual: +0.2% (Mar.)

What to Look for

• The April employment report is expected to show another steep decline in payrolls, down 625,000 in the month, after a 663,000 decline in March.
• The unemployment rate is expected to rise to 8.9%, from 8.5%.

Implications

Although unemployment insurance claims indicate that the pace of layoffs may have peaked, job losses are still heavy, and the numbers claiming unemployment insurance continue to climb rapidly. The labor market will turn around only after the rest of the economy improves. Government payrolls may get a temporary boost from hiring for preparatory work on the 2010 census.