The Week Ahead


Monday, May 6, 10 a.m.

Output per hour worked in the nonfarm business sector probably increased by about 0.5%, at an annual rate, in the first quarter. The small gain is suggested by a steeper decline in total hours worked compared with the decline in the real gross national product. Much of the productivity gain will be in manufacturing, where output per hour likely rose at a 1% pace. In the fourth quarter, nonfarm productivity grew at a 0.4% annual rate, but factory output per hour dropped at a 1.7% pace. The projected small gain in productivity suggests that unit labor costs in the nonfarm sector rose at a 4.5% annual rate in the first quarter, faster than the 3.6% gain in the fourth quarter. Factory unit labor costs last quarter probably fell about 1%, after a sharp 6.2% jump.


Consumers likely continued to pay down their debt levels in March. Economists surveyed by McGraw-Hill Inc.'s MMS International expect that installment credit fell by an additional $1 billion. If so, that would be the fourth decline in a row. In February, debt fell $2.3 billion. Cutbacks in consumer spending, especially on new cars, is keeping credit use in check. Auto financing has been falling steadily for more than a year, including a steep $3.1 billion decline in February.

PRODUCER PRICE INDEX Friday, May 10, 8:30 a.m.

The MMS consensus is that producer prices edged up by a mere 0.1% in April, as the recession and falling gas prices moderate the inflation rate. Dropping fuel costs caused the producer price index to fall 0.3% in March and 0.6% in February. Economists also project that the index, excluding volatile gas and food prices, rose about 0.2% last month, the same pace as in March. The small expected gain in April would mean that the total PPI has risen by about 3% in the past year, slower than the 3.7% increase in the 12 months before that. Excluding food and fuel, prices would be up about 3.7%, the same gain as a year earlier.

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