Retail sales likely rebounded in April

This week’s economic news is expected to shed light on whether Friday’s disappointing jobs report was a blip or the start of a trend. Key to watch: if a dynamic labor market is losing some of its mojo and if retail sales are picking up after a sluggish first quarter.

The Labor Department’s Job Openings and Labor Turnover Survey, due out Tuesday, peeks beneath the headline payroll numbers to gauge the labor market’s vibrancy. Job openings have hovered near record levels for many months, reflecting strong employer demand. Recently, the numbers of hires and quits also have accelerated, suggesting that workers feel confident enough in their job prospects to make a switch. That should place further upward pressure on modest wage increases. The report lags by a month and so will provide a reading on activity in March. Still, if openings, hires and quits all remained at high levels, it may be a sign that the lackluster 160,000 April employment gains reported Friday represent just a temporary slowdown.

Retail sales and consumer spending broadly have underpinned both economic and job growth, but they sputtered in the first quarter. That helped slow economic growth to 0.6% at an annual rate following a tepid 1.4% gain in the fourth quarter. Many economists cite passing drags, such as a pullback in auto sales. But car sales bounced back in April and “should provide a boost to the overall sales numbers,” says Lewis Alexander, Nomura’s chief U.S. economist. Meanwhile, he says, generally steady job growth, low gasoline prices and solid household balance sheets should further bolster sales, he says.  And citing reduced volatility in financial markets since February, RBC Capital Markets estimates the Commerce Department will report Friday that a core measure of retail sales increased a healthy 0.4% in April.

Wholesale prices typically don’t get much attention. But the Federal Reserve hasn’t ruled out a June rate hike and is keenly looking for inflation to pick up before raising interest rates again. The central bank lifted its benchmark rate in December for the first time in nearly a decade but has stood pat since. Economists estimate the Labor Department’s producer price index rose a solid 0.3% in April, but a core measure that excludes volatile food and energy costs is expected to tick up just 0.1%. That could mean the consumer prices closely monitored by the Fed also remained tame.