The Week Ahead

RETAIL SALES Thursday, Mar. 12, 8:30 a.m.

Retail sales in February are expected to have risen by 0.5%, according to the median projection of the economists surveyed by MMS International. Sales had increased by 0.6% in January--the largest increase in eight months. Reports from retailers that sales continued to improve in February, plus a modest uptick in car buying in the month, suggest the rise. The economists expect retail sales, excluding autos, to post a smaller gain of 0.3%. The housing recovery likely lifted purchases of home-related goods, and a price-induced rise in gasoline outlays added some strength. Even if the economists' projection is right, the real volume of sales--adjusted for price increases--will still be below its fourth-quarter average.

PRODUCER PRICE INDEX Friday, Mar. 13, 8:30 a.m.

The MMS consensus expects the February producer price index for finished goods to show a gain of 0.2%. That would follow a 0.3% decline in January. Higher prices for energy and food were not a factor in February, say the economists. Excluding those two volatile categories, the core PPI is also expected to increase 0.2%, and prices of intermediate and crude goods should remain tame. If the projection is right, PPI inflation during the past year will be only 0.4%, and the core PPI will be up only 2.4%.

BUSINESS INVENTORIES Friday, Mar. 13, 10 a.m.

Inventories held by manufacturers, wholesalers, and retailers probably fell by about 0.2% in January. Manufacturers have already reported a 0.3% cut in their stockpiles for the month. Factory inventories were brought down by the combination of a 1% drop in manufacturing output and a 0.1% rise in factory shipments. A pickup in January retail sales probably helped retailers reduce their stock levels a bit as well. Overall business sales in January probably rose by about 0.3%. Inventory-cutting in the first quarter will result in a subtraction from the quarter's growth in real gross domestic product.