S&P futures are pointing to a higher opening on Monday morning, following a 3.47% gain last week. The upward movement is being boosted by a gain in China’s manufacturing sector, which signals global recovery to some investors, even as General Motors officially files for Chapter 11 bankruptcy protection. Stocks could be pushed in any direction this week though, as plenty of heavy data have the potential to sway markets.
On Monday the major release is the ISM Manufacturing index, a nationwide survey that has been in contraction since February 2008. On Wednesday its cousin, the ISM non-manufacturing index, is expected to show the eighth straight month of slowdown. The week will end with the most closely-watched data release: the Employment Situation report, which analysts believe could show an unemployment rate of 9.4%.
Key Releases for June 1 - June 5:
The week begins with the 8:30 am release on Personal Spending & Outlays for April, which, just released, showed personal income advance 0.5% in the month, following a 0.2% decline in March. Meanwhile, consumption fell back 0.1%, a smaller decline than the prior month’s 0.3% drop.
The report also showed that personal savings move up rapidly to 5.7%, compared to just 4.5% in March.
At 10 am May’s ISM Manufacturing Index will be posted. The survey is based on responses from manufacturing executives across the nation and thus has the potential to push markets in both directions. Last month the index improved from 36.3 to 40.1, and
analysts this month see reason for further improvement to 42.0. Any reading below 50 is indicative of overall contraction in the manufacturing sector, but signs of improvement and stabilization will be welcome by investors, especially on top of the Chinese report previously mentioned.
Also at 10 am, the Construction Spending report is expected to show a 0.8% drop in April. This report is watched less closely by markets but it is of interest to those in real estate.
Analysts at IHS Global Insight said the construction report is reliable in forecasting the direction of single-family home construction. “Single-family construction dropped 8.5% in March,” they wrote. “The April drop will be closer to 5.0%, and going forward, the drops will get progressively smaller, since single–family housing starts are stabilizing.”
Tuesday will be a lighter day but those in real estate will want to check out the Pending Home Sales Index, released by the National Association of Realtors at 10 am.
The day will also see the release of two weekly retail sales surveys, as well as the monthly look at motor vehicle sales.
On Wednesday, the ISM Non-Manufacturing Index ―a survey of the services, construction, and financial industries ― is set to show minor improvement in May compared to April. Like its cousin index, a score below 50 represents overall slowdown, and this month analysts look for a score of 45, compared to 43.7 in April.
The day also sees the weekly release of Loan Applications from the Mortgage Bankers Association; the ADP Employment report, which is used to forecast Friday’s official figures; and Factory Orders, a more detailed report on orders for durable goods.
Thursday will be comparatively light. The Jobless Claims report will be of interest at 8:30. The weekly report is the most immediate look at the labor market, though its results have no impact on the Employment Situation report coming out Friday.
Also at 8:30 is the first-quarter look at Productivity and Costs. Analysts surveyed by Bloomberg expect nonfarm productivity to improve 1.2% from January to March, while unit labor costs probably advanced 2.8%.
Friday is the most important day this week with the release of the Nonfarm Payrolls survey, officially known as the Employment Situation report. Since the recession began in December 2009, the unemployment rate has shot up from 4.9% to 8.9%, and in May analysts looks for the rate to tick up from somewhere between 9.1% and 9.4%. In terms of monthly losses, the consensus looks for 530,000 jobs to have vanished in May, following 539,000 losses in April.
The rest of the day is fairly quiet but markets will pay close attention to a panel of officials speaking from the central bank’s Washington headquarters at 2:15 pm . Vice Chairman Donald Kohn will moderate a panel on financial markets and monetary policy, including San Francisco Fed President Janet Yellen, Boston Fed President Eric Rosengren, and IMF chief economist Olivier Blanchard.