Tuesday at 8:30 am ET data on personal income and spending will be unveiled. Personal income is the total dollar value of income received from all sources by individuals. The data is another way to gauge the strength of the consumer sector in the economy.
Personal income swung up 0.4 percent in May, following a 0.2 percent dip in April. Due to moderately healthy wage and job growth in June, it is likely the report will show another good gain for personal income. The consensus estimate for personal income is a growth rate of 0.6 percent, slightly higher than May. An increase is good for the economy, especially amidst concerns that the spread of the subprime mortgage crisis to prime mortgages could impact consumer spending. However, inflation is still a concern for the Fed.
Also at 8:30 am ET the employment cost index will be made available. The employment cost index is simply that: the measure of total employee compensation costs, including wages and salaries as well as benefits. It is the broadest measure of labor costs. It is an easy way to measure wage trends and evaluate the risk of wage inflation.
The employment cost index rose a softer-than-expected 0.8 percent in the first quarter, though the wage & salary component did show pressure. That component rose 1.1 percent for the sharpest gain in six years. The benefit reading, subdued by lower employer contributions to retirement plans, is the lowest in eight years. Analysts expect a 0.9 percent rate for the second quarter.
At 9:45 am ET the National Association of Purchasing Management - Chicago (NAPM-Chicago) will make available its survey of business conditions in the Chicago area. The report is considered a leading indicator of the ISM manufacturing index, which comes out Wednesday. Analysts expect to see a slight decrease for the month of July, after May and June came in above 60. The official estimate is 58.
The consumer confidence index is scheduled for release tomorrow at 10:00 am ET. Consumer confidence is the overall attitude of consumers with regard to present economic conditions. It is considered a good indication of the condition of consumer spending. Because consumer spending makes up two-thirds of the economy, consumer attitude is often the foremost influence on stock and bond markets.
The consumer confidence index dropped sharply in June, down to 103.9 from May`s 108.5. For July analysts expect a modest increase to 105. Last week consumer sentiment from University of Michigan showed that, on the whole, July was a strong month for consumers. Investors hope the good news will be continued in the consumer confidence index.
Finally, set for release at 10:00 am ET is the report on construction spending. Construction spending is the dollar value of new construction activity on residential, non-residential, and public projects. The data is a good indicator of the economy`s momentum, because businesses and individuals only put money into new construction when they are confident that demand is strong enough to justify the expansion.
Construction spending spiked 0.9 percent in May, following a 0.2 percent increase in April. The May increase was well above the market forecast for a 0.2 percent increase. Analysts expect a more modest increase of 0.2 percent for June.
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