Clues coming on slowdown, inflation

The stock market has been on the upswing, but few investors are relaxing. This week’s data on housing, retailers and labor costs will give Wall Street an idea of whether the economy is weakening or inflation is accelerating -- or both.

Recent government reports have not painted a rosy picture of the economy, but they haven’t indicated the nation is in the midst of a deep recession either.

The Labor Department’s employment report last week showed a net job loss in January for the first time in four years, but a report from the Institute for Supply Management said the manufacturing sector expanded. The Commerce Department said personal spending was growing at the weakest pace in more than a year, but it also reported a solid gain in orders of durable goods.

The Commerce Department’s index last week for personal consumption expenditures, a gauge of inflation, rose 0.2% in December from November levels. This week, the Labor Department reports on productivity and labor costs; the market is expecting labor costs to decline and could be disappointed if they end up rising.

Economists surveyed by Thomson/IFR are preparing for more signs that the economy is still growing but very slowly because of a weak consumer. They expect the Commerce Department’s December factory orders index Monday to tick up and the Institute for Supply Management’s data on January service sector growth, reported Tuesday, to show a slight slowdown. They also expect the weekly ICSC-UBS chain store sales index on Tuesday to post a decline.

On Thursday, the National Assn. of Realtors will release its index on pending sales of existing homes, and economists predict a modest increase. That same day, retailers release sales results for January.

Investors will also pay close attention to speeches from Fed officials for insight into their thoughts on the economy and inflation. Atlanta Fed President Dennis Lockhart, Richmond Fed President Jeffrey Lacker, Fed Gov. Randall Kroszner, Philadelphia Fed President Charles Plosser and San Francisco Fed President Janet Yellen will all make public appearances this week.

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At a glance

Today

Commerce Department reports on factory orders.

President Bush’s 2009 budget proposal expected to be released.

French Finance Ministry submits report on Societe Generale trading scandal.

Quarterly earnings due from Anadarko Petroleum Corp., Archer Daniels Midland Co., Humana Inc., News Corp., Wendy’s International Inc., Yum Brands Inc.

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Tuesday

Institute for Supply Management releases its service sector index.

Quarterly earnings due from Avon Products Inc., Boston Scientific Corp., Chicago Mercantile Exchange Holdings Inc., Duke Energy Corp., NYSE Euronext Inc., Tyco International, Walt Disney Co., Whirlpool Corp.

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Wednesday

Labor Department reports on productivity and costs.

Quarterly earnings due from Biogen Idec Inc., Cigna Corp., Cisco Systems Inc., Electronic Data Systems Corp., IAC/InterActiveCorp, McClatchy Co., MetLife Inc., Napster Inc., Prudential Financial Inc., Sara Lee Corp., Thermo Fisher Scientific Inc., Time Warner Inc., Warner Music Group Corp.

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Thursday

Labor Department reports on weekly jobless claims.

Federal Reserve reports on consumer credit.

Freddie Mac reports on mortgage rates.

Retailers release sales results.

Quarterly earnings due from Aetna Inc., Aon Corp., AutoNation Inc., D.R. Horton Inc., International Paper Co., PepsiCo Inc., Reynolds American Inc., Thomson Corp.

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Friday

Quarterly earnings due from Weyerhaeuser Co.

Source: Associated Press