WASHINGTON (AFX) - Economic indicators to be released this week will show that US consumer confidence improved slightly during May amid divided evidence about whether the manufacturing sector is also beginning to show growth, economists said. US financial markets are closed Monday because of the Memorial Day holiday. Mike Carey, a US economist at Credit Lyonnais in New York, said the markets are likely to focus on the Chicago Purchasing Management Association's index of regional business activity for May which is due to be released Friday. "I think that'll be what the market is focusing on," Carey said, explaining that the index is likely to rise because recent orders and production data are likely to support a slight gain in Chicago manufacturing activity. A consensus forecast of 10 economists polled by AFX News, however, calls for the Chicago PMI index to decline marginally. Four of the ten economists surveyed called for a gain in the Chicago PMI with the remaining six expecting a decline in activity. "The auto industry for example continues to increase production and that should, I think, show up more in the Chicago numbers," Carey added. The markets are also likely to be keeping a close eye on the two key consumer confidence measures which are due to be released in the coming week.
Tomorrow, the Conference Board releases its latest update on consumer confidence for May while the University of Michigan is due to release its final consumer sentiment index reading for May on Friday. Economists at Lehman Brothers expect consumer confidence "to push modestly higher in May." "Early in May, a decline in gasoline prices and a stabilisation in stock prices probably boosted consumer confidence," the Lehman economists told clients in a briefing note. However, they noted that confidence could fall going forward amid government warnings about further terrorist attacks, a lackluster stock market, and further layoff announcements. International Business Machines Corp is reportedly planing to lay off 1,000 staff in addition to 8,000 global layoffs already in the pipeline. Economists said consumer spending likely accelerated in April and that this is expected to have underpinned improvements to consumer spending and income data for the month. The rise in US auto sales surprised some analysts in April, but they said it points to strong retail sales and should boost economic output in the coming months. "(Consumer) spending re-accelerated in April, after a softer March, as vehicle sales rose back above a 17 million unit annualized pace for the first time in 2002 and non-auto retail sales scored widespread gains," said Mickey Levy, a US economist at Bank of America in New York. Levy added that fresh data on April factory orders in the coming week is likely to confirm that the manufacturing expansion is gaining momentum "as firms try to increase production sufficiently to catch up with rising demand."

Following are the consensus forecasts of Wall Street economists for data to be released this week.
APRIL CONSUMER SPENDING AND INCOME, Tuesday (8.30 am): Economists expect consumer spending to increase 0.3 pct and income to rise 0.7 pct in April after spending and income rose 0.4 pct respectively in March.
MAY CONSUMER CONFIDENCE, Tuesday (10.00 am): Economists forecast that the Conference Board's consumer confidence index rose to 109.0 in May, up from the April reading of 108.8.
APRIL EXISTING HOME SALES, Tuesday (10.00 am): Economists said existing home sales rose 0.4 pct in April to a seasonally-adjusted annual rate of 5.38 mln units after sales fell 8.3 pct in March to 5.40 mln units.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Forecasts indicate that initial claims for regular state unemployment benefits rose by 4,000 to a seasonally adjusted 410,000 for the week ended May 25 after claims fell 9,000 to 416,000 in the prior week.
Q1 PRODUCTIVITY AND COSTS, Friday (8.30 am): Economists said non-farm business productivity rose a revised 8.4 pct in the final estimate for the first quarter compared with an initial estimate of an 8.6 pct rate.
Productivity increased at a 5.5 pct rate in the fourth quarter. The 8.6 gain, is the highest quarterly increase in productivity since the second quarter of 1983. Unit labor costs, a figure closely followed for signs of inflation pressures, are seen declining a revised 5.2 pct in the final estimate compared with a prior estimate of 5.4 pct decline. Unit labor costs fell 3.1 pct in the fourth quarter.
MAY CHICAGO PURCHASING MANAGERS INDEX, Friday (10.00 am): Economists expect the Chicago Purchasing Management Association's index of regional business activity to decline marginally to 54.5 in May from 54.7 in April. If the index remains above 50 -- a reading above 50 signals expanding economic activity -- it would mark the fourth consecutive month that the index has remained above this benchmark.
UNIVERSITY OF MICHIGAN MAY CONSUMER SENTIMENT INDEX, Friday (10.00 am): Economists forecast that the University of Michigan's final consumer sentiment index reading for May rose to 95.8 in the final reading from the initial estimate of 96.0.
APRIL FACTORY ORDERS, Friday (10.00 am): Economists said factory orders for manufactured goods increased 1.2 pct in April from 0.4 pct in March.