The Week Ahead


Consumer installment credit in May probably increased by about $1.5 billion, according to the consensus expectation of economists surveyed by McGraw-Hill Inc.'s MMS International. That would follow a $1.7 billion advance in April. Prior to April, installment debt had fallen for four consecutive months. May's strong rise in consumer spending suggests that households expanded their revolving credit, and a slight pickup in car sales in May probably fueled auto loans. Monthly gains in installment debt had slowed sharply during 1990 and early 1991, and increases of less than $2 billion per month are small compared with past recoveries. With income growth still sluggish, consumers are likely trying to pay off old loans before taking on new debt.

PRODUCER PRICE INDEX Friday, July 12, 8:30 a.m.

The MMS consensus projects that the producer price index for finished goods settled down in June, rising a slim 0.1%. The PPI in May had jumped an unexpectedly large 0.6% because of several one-time price hikes. Producer prices, excluding the food and energy sectors, are expected to post a likewise modest gain of only 0.2%. This core rate of inflation had slowed to 3.6% during the year ended in May, from 4.1% in January. And there remain no signs of price pressures at the earlier stages of production.

RETAIL SALES Friday, July 12, 8:30 a.m.

The economists in the MMS survey expect to see a 0.5% increase in retail sales for June, half of the 1% advance posted in May. Car buying provided some lift. Sales of both domestic and imported autos rose to an annual rate of 8.4 million in June, from 7.9 million in May. Gains elsewhere were likely held back by lower gas prices, which reduced revenues at gasoline stations, and by strong sales in May, which stole some purchases from June. Unusually hot weather in May accelerated purchases of summer items. Excluding cars, June retail sales are expected to show a rise of 0.4%, after a 0.9% gain in May.

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