The WWD Global Stock Tracker finished May with a 0.5 percent gain to 113.07, but the index remains down 1 percent in the three-month period. But economic reports coming out this week could strengthen stock prices as investment algorithms react to jobs numbers and consumer spending reports.
Last week, the adjusted gross domestic product figures showed negative growth, and signaled a stalled U.S. economic recovery. However, economists and analysts have said for the past month that despite a drop in consumer confidence, spending and a weak jobs report for March, the American economy is on track to show growth in the second half.
Despite the negative impact of a strong dollar, which has weighed down sales and profits at companies across the fashion apparel, beauty and retail segments, businesses as a whole have continued to expand. The question is, how long will it last?
IHS Global Insight economists Patrick Newport and Stephanie Karol said in a preview that the employment report to be released this Friday should show a gain of 195,000 jobs for May. “Businesses are still expanding, but last year’s rapid expansion brought large wage bills, and employers have needed to slow the pace of payroll growth to respond to lower GDP growth,” the analysts said, adding that the exception is with non-manufacturing industries, which will continue to expand.
Manufacturing expansion is good for U.S. consumer spending because these jobs pay higher wages, and household spending tends to increase as these types of jobs grow.
Lower fuel prices – although they have increased slightly recently – are also expected to continue bolstering consumer spending, but not necessarily on apparel, accessories and related categories.
On Monday, the personal expenditure report is set for release, and IHS Global Insight is expecting consumer spending to advance 0.2 percent in April — driven by a personal income gain of 0.3 percent.