The Week Ahead

PRODUCTIVITY AND COSTS Tuesday, May 5, 10 a.m.

Output per work hour at nonfarm businesses likely increased at about a 1% annual rate in the first quarter, following a stronger 1.9% rise in the fourth quarter. That's suggested by a 1% gain in total hours worked and the 2% advance in real gross domestic product. As a result, unit labor costs in the nonfarm sector were probably up at a 2.5% clip last quarter, after edging up by just 0.9% in the fourth.

CAR SALES Tuesday, May 5

New domestically made cars likely sold at an annual rate of just 5.7 million for all of April, down from 6 million in March. Car sales were at a dreadful 5.6 million pace in the first 20 selling days of last month, but economists polled by MMS International, a division of McGraw-Hill Inc., are forecasting that sales in late April rose to a 6 million rate.


Consumers probably paid off as much of their debts as they added in March, according to the MMS report. The resulting flat reading for outstanding debt is indicated by sluggish retail sales and a drop in personal bank loans in March. Since the recession started in mid-1990, households' use of credit has slowed. In February, installment debt dropped by $199 million. As a percent of disposable income, credit has fallen to a 6 1/2-year low.

EMPLOYMENT Friday, May 8, 8:30 a.m.

The MMS consensus is that nonfarm payrolls increased by a modest 70,000 in April. However, the most optimistic forecast--perhaps based on the downtrend in initial unemployment claims--calls for a strong 165,000 gain in new jobs. Payrolls edged up by just 19,000 in March, and are no higher than they were in December. That's worrisome for the outlook because the lack of new jobs derailed last spring's recovery. Economists also project that the unemployment rate stood at 7.3% in April, unchanged from February and March.

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