US: PCE, ISM, FOMC and NFP - Danske Bank

Next week data to be released in the US includes the PCE core on Monday, ISM on Tuesday and the official employment report on Friday. Also, the FOMC meeting will be held. According to analysts from Danske Bank expect employment growth to rebound to 200K in April. 

Key Quotes: 

“In the US, we have a packed calendar next week. We estimate the PCE core index, released on Monday, rose 0.2% m/m in March, which should increase the core inflation rate from 1.6% to 1.9%, as the base effects of last year’s fall in prices for wireless telephone services fall out.”

“On Tuesday, the ISM manufacturing index is due out and we expect a fall from 59.3 to 58.0. We expect ISM manufacturing to decline further over coming months but stress that ISM manufacturing has been elevated for quite some time now compared with other indicators and hard data.”

“At the May FOMC meeting on Wednesday, we expect the Fed to maintain the target range at 1.50-1.75%. As this is one of the small meetings without updated dots and no press conference, we believe the Fed is unlikely to change its policy signal significantly. The expected June hike is almost already fully priced in and we do not believe the meeting will change much.”

“On Friday, the jobs report for April is due out. As employment continues to rise, the main focus is still on average hourly earnings, as many economists are still puzzled about why wage growth (and inflation) remains subdued, as the labour market has tightened substantially. We estimate average hourly earnings rose 0.2% m/m in April, in line with the recent trend, implying an unchanged annual growth rate of 2.7% y/y. We expect employment growth to rebound from the weak print of 103,000 in March to around 200,000 in April. We would not be surprised to see a decline in the unemployment rate from 4.1% to 4.0%, as employment growth remains higher than
labour force growth.”