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Inflation watch continues with release of U.S. consumer, producer price reports

U.S. jobless claims unexpectedly rose last week, up 43,000 to 474,000 – the worst reading since last August. A moderation is expected this week.


The inflation watch continues in the United States this week.

Reports are coming on consumer and producer prices for April, and both are likely to show the effects of strong commodity prices. But that's a trend that may already be unwinding after last week's big selloff, which included a drop below $100 (U.S.) a barrel for crude.

Inflation is important because it's the key measure the U.S. Federal Reserve looks at in timing its eventual return to higher interest rates.

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Also on tap this week are notable reports on housing, trade, and consumers.

The highlights:

U.S. producer prices for April (Thursday) and the April consumer price index (Friday):

The numbers are likely to show the effect of surging commodity prices in April. So expect a significant uptick in both. (The consensus is for a 0.6-per-cent jump in the PPI and an a 0.4-per-cent rise in the CPI).

Canadian and U.S. trade numbers for March (Wednesday):

Canada has enjoyed a trade surplus so far this year, paced by exports of autos and oil. But the high dollar is eating into exports, causing the surplus to shrink (the consensus calls for a $500-million surplus). Economists expect a modest increase in the U.S. trade deficit (consensus: $47-billion, up from $45.8-billion)

Also worth watching:

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U.S. weekly jobless claims (Thursday):

Jobless claims unexpectedly rose last week, causing some angst among economists. Claims were up 43,000 to 474,000 - the worst reading since last August. Expect a moderation this week, but anything above 400,000 remains an unwelcome sign (the consensus expectation is 420,000).

University of Michigan consumer sentiment (Friday):

Look for a hint that the U.S. killing of Osama bin Laden has lifted the spirits of U.S. consumers. Last month's reading was 69.8, but the number has bounced around since last summer (the consensus is 70).

U.S. retail sales for April (Thursday):

High gasoline and food prices don't seem to have deterred shoppers (the consensus is a 0.6-per-cent monthly rise).

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Canadian housing starts for April (Monday):

Starts have remained surprisingly strong in Canada despite weakening demand for homes. Expect a number in line with February and March, when starts reached 180,000 and 185,000 respectively. A 17.2-per-cent surge in building permits in March points to a decent April for starts (the consensus is 184,000).

The rest:

Canadian new housing price index on Thursday, U.S. bankruptcy and foreclosure filings, U.S. business inventories (also Thursday) and three auctions of U.S. Treasuries (on Tuesday, Wednesday and Thursday).

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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