WASHINGTON (AFX) - US economic data this week will show consumers have been less inclined to spend money while their confidence has waned a bit, despite the recent drop in the unemployment rate, economists said.
"Retail sales will probably take a breather after last month's unexpectedly strong gain," said Ethan Harris and Steve Slifer of Lehman Brothers in New York.
Breather was a common refrain for those who watch America's spending habits. "Consumers probably took a breather," said the economists at Credit Suisse First Boston.
The expected drop in revenue for US retailers is partly a result of lower prices.
"We also look for softer prices to depress retail sales," Harris and Slifer said, adding "with demand waning, and discounting failing to attract the same numbers of shoppers, we look for real consumer spending to trend along at a moderate 3.0 pct for the rest of the year."
While the demand is dropping production appears to be growing.
"On the one hand, the pace of production has quickened. On the other, final demand growth is slowing and income growth trends are weak," said Bill Dudley of Goldman Sachs in New York.
The manufacturing sector is expected to show continued recovery.
"Manufacturers continue to increase production in order to stabilize inventories while accommodating moderate demand growth," said Mickey Levy of Banc of America Securities in New York.
Following are the consensus forecasts of Wall Street economists for data to be released this week: MAY IMPORT PRICES, Wednesday (8.30 am): Economists said import prices rose 0.3 pct in May compared with a 1.4 pct increase in April.
MAY RETAIL SALES, Thursday (8.30 am): Economists expect May retail sales to decline 0.2 pct after sales rose 1.2 pct in April.
MAY PRODUCER PRICE INDEX, Thursday (8.30 am): Economists said producer prices rose 0.2 pct in May after dropping 0.2 pct in April. The core PPI rate, which excludes volatile food and energy prices, is seen rising 0.1 pct after it grew 0.1 pct in April.
WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Forecasts indicate that initial weekly claims for regular state unemployment benefits rose by 17,000 to a seasonally adjusted 400,000 for the week ended June 8 after claims fell 32,000 to 383,000 in the prior week.
APRIL BUSINESS INVENTORIES, Friday (8.30 am): Economists expect business inventories to fall a seasonally adjusted 0.2 pct in April, after they fell 0.3 pct in March. Another inventory decline in April would mark the 15th straight monthly fall in inventories.
MAY INDUSTRIAL PRODUCTION, Friday (9.15 am): Economists said industrial output increased 0.3 pct in May after rising 0.4 pct in April. An increase would be the fifth consecutive rise after output fell in 14 of the 15 prior months. Utilisation is seen rising to 75.7 pct of capacity in May from 75.5 pct in April.
UNIVERSITY OF MICHIGAN JUNE CONSUMER SENTIMENT, Friday (10:00 am): Economists forecast that the University of Michigan's June consumer sentiment index will fall slightly to 96.6 in the preliminary reading after rising to 96.9 in May's final reading.