The arrival of spring-like temperatures probably brought a rebound in job growth in May following a couple of lackluster months marked by volatile weather.
Besides the May employment report, the week’s economic news features a revised estimate of economic growth in the first quarter and the latest readings of consumer confidence and spending as well as manufacturing activity.
Americans’ outlook on the economy and financial conditions has hovered near 18-year highs as solid job and income growth and federal tax cuts offset worries over rising gasoline prices and U.S. Trade skirmishes. Economists expect the Conference Board on Tuesday to report that its index of consumer confidence dipped in May but remained at a lofty level.
The economy slowed in the first quarter to a 2.3% annual pace from about 3% in the final nine months of 2017. But the pullback wasn’t as sharp as anticipated, with sturdy business investment and stockpiling offsetting weak consumer spending. In its second estimate, the Commerce Department will likely find that consumption was even softer than believed while business investment was a bit stronger, says Nomura economist Lewis Alexander. All told, economists expect Commerce on Wednesday to leave its first-quarter growth estimate unchanged at 2.3%.
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All signs have pointed to a pickup in consumer spending in the second quarter. A core measure of retail sales that excludes volatile categories such as autos and gasoline rose a healthy 0.4% last month. Economists expect Commerce on Thursday to report that consumer spending broadly, including for services, increased 0.4% in April for the second straight month.
On Friday, the Labor Department releases its closely-watched jobs report. In March, employers added just 135,000 jobs after unseasonably warm weather pulled forward hiring early in the year. Then in April, cooler temperatures helped limit payroll gains to 164,000, below the 200,000-plus pace in January and February. Economists figure the labor market is due for a comeback in May, estimating that 190,000 jobs were added. After falling from 4.1% to a new 17-year low of 3.9% in April, the May unemployment rate is expected to hold steady.
The nation’s factories have been buoyed by a revived oil industry and a solid global economy. Those forces generally have outweighed trade concerns. Economists estimate the Institute for Supply Management will announce that its index of manufacturing activity rose modestly in May to a level that reflects continued strong expansion.