Reports to show economy growing at moderate pace
Volatility in the stock market last week provided a glimpse of investors’ pause as they wrapped up the second quarter.
But a slew of economic data coming out this week will likely show that the economy is still humming along at a moderate pace with a steady, if not spectacular, labor market.
“We see a bit more inflation from increasing pressure induced by tighter labor markets,” wrote Lewis Alexander, an economist at Nomura, in a note Friday. But potential economic growth will remain low due to sluggish productivity growth and a decline of the labor force participation rate, he said.
U.S. construction spending data, out Monday, are expected to slightly rebound in May after a tepid April. A slowdown in both residential and non-residential construction led to a 1.4% decline in April.
“Despite this decline, the underlying pace of construction spending appears to be steady,” fueled by private construction activity, Alexander said. “Active oil rig counts have been gradually rising, pointing to continued growth in energy-related structures investment.”
Auto sales data, expected from car manufacturers on Monday, could show a year-over-year decline because the industry is coming off record highs in 2016. But Nomura expects data to show slight improvement in June to an annualized pace of 16.8 million units from 16.6 million in May. Still, tighter consumer car loan lending and higher dealer discounts still pose challenges for the industry, Alexander said.
Employment continues to be a mixed bag. While the unemployment rate remains low, the pace of hiring seems to have slowed in recent weeks. ADP’s employment report on
Thursday will likely show an increase of 160,000 in private payrolls in June, slowing from 253,000 a month earlier, Nomura said. ADP is a human resources technology firm.
The more comprehensive employment report, expected on
Friday from the Labor Department, is estimated to show an increase of 165,000 in non-farm payrolls. That compares with the average payroll gain of 201,000 from December through February. Between March and May, growth slowed to an average of 122,000.
Joblessness low, but rate slowing for hiring