The week ends with the release of U.S. PPI, advance retail sales and the preliminary print of the University of Michigan/Reuters consumer confidence index.

August's annualized core PPI is expected rise 3.7% following July's increase of 3.5%. Headline PPI is also expected to rise 10.2% following July's increase of 9.8%.

Economists from Scotia Capital expect commodity prices to continue to exert pressure on producers.

"Core PPI should also see some moderation on a monthly basis as prices in general begin to fall from elevated levels although there will likely be some pass-through into core PPI as some producers were forced to raise their prices as their margins continued to be squeezed," the economists wrote in a note to clients.

Markets will also be focused on how retail sales are progressing, given the tight credit conditions in the U.S. U.S. retail sales excluding autos are expected to fall 0.2% following July's rise of 0.4%.

Economists from JPMorgan are not feeling very confident about the retail sales report, as weak employment data has had its effect on consumer spending habits.

"Some of the key factors weighing on core retail sales in August included a large rise in unemployment and the disappearance of tax rebate checks, whose disbursement had been completed by mid-July, they wrote in a report.

Also scheduled for release on Friday, the University of Michigan/Reuters consumer sentiment index for September is expected to tick higher to a reading of 64.0 following July's 63.0 level.

U.S. business inventories are expected to rise 0.5% in July, below the prior month's 0.7% increase.

All times in EDT:

8:30 CA Capacity Utilization Rate Q2 Exp: +78.8% Prior: +79.8%

8:30 CA International Investment Position Q2

8:30 US Producer Price Index (M/M) August Exp: -0.5% Prior: +1.2%

8:30 US PPI Ex Food & Energy (M/M) August Exp: +0.2% Prior: +0.7%

8:30 US Producer Price Index (Y/Y) August Exp: +10.2% Prior: +9.8%

8:30 US PPI Ex Food & Energy (Y/Y) August Exp: +3.7% Prior: +3.5%

8:30 US Advance Retail Sales August Exp: +0.2% Prior: -0.1%

8:30 US Retail Sales Less Autos August Exp: -0.2% Prior: +0.4%

8:30 US Assistant Treasury Sec. Solomon Speaking on Taxation of Real Estate

10:00 US University of Michigan/Reuters Confidence September Preliminary Exp: +64.0 Prior: +63.0

10:00 US Business Inventories July Exp: +0.5% Prior: +0.7%

By Steve Stecyk
©CEP News Ltd. 2008