The pivotal piece of data in the May 15 week should be the release of retail and food services sales for April at 8:30 ET on Tuesday. As the earliest data for the second quarter 2023 comes in, it will be assessed to see if growth has picked up after the 1.1 percent increase in the first quarter – which included stronger-than-expected personal consumption expenditures although overall it was below forecast. The April employment report showed payrolls and wages are still rising, although at a somewhat slower pace. This could mean that households will be more inclined to shop and get out for travel and leisure activities.

Early April could have seen an uptick in spending associated with the Passover and Easter observance period, although that seems to have faded quickly, at least for in-person shopping. It is possible that shopping online was strong. The increase in the pace of motor vehicle sales in April to 15.9 million units at an annualized rate compared to 14.8 million in March points to a likely boost for this category. Prices for gasoline were on the rise in April and only eased late in the month. The April average for regular gas was $3.603 per gallon compared to $3.422 in March. However, seasonal adjustment factors should take this into account as April prices typically rise in the changeover period to summer fuel formulations that have a deadline of May 1.

The modest improvement in conditions in the housing market that have accompanied a dip in mortgage rates may also help retail sales in categories like building materials or furniture and appliances. Current homeowners are generally inclined to do some repairs and upgrades of home and home furnishings when the weather is warmer. Note this report will include annual revisions released on April 24.

There are a few housing market reports in the May 15 week that should be of interest as well. Any sign of a bottoming after the downturn that began in the second half of 2022 will be welcome. Industry organizations have said that one of the biggest deterrents to home sales right now is the lack of supply of existing homes. It looks like potential homebuyers remain extremely sensitive to mortgage rates, but when the 30-year fixed rate drops below about 6.5 percent it does spark some buying. Without existing units coming on to the market – homeowners with rates around 5.5 percent and below are unwilling to lose the favorable rate and take on a higher one – homebuilders are getting a chance to capture some of the market. The NAHB/Wells Fargo Housing Market Index for May at 10:00 ET on Tuesday should tell us whether single-family home builders are seeing improvements and if there could be some upward momentum in demand.

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