Empire State Manufacturing Index (June, Tuesday 8:30 ET)

Forecast: 23.1 Consensus: 20.0 Previous: 19.1

The Empire State Manufacturing Index is expected to be the first glimpse of strong manufacturing activity in June. The index is expected to remain high and improve slightly from the previous month’s levels. This result would indicate that the manufacturing industry continues to be the driver of economic growth. As a result, we could expect to see subsequent improvement in the ISM, Industrial Production and manufacturing payrolls.

Housing Starts (May, Wednesday 8:30 ET)

Forecast: 660K Consensus: 648K Previous: 672K

While housing starts will remain well above last year’s levels, they are expected to slow in May following two months of substantial growth. Inventories of new homes are at historically low levels and builders’ confidence has improved, but the excess supply of existing homes and less than robust demand will keep many builders’ tools in the tool shed. The recent pick-up in housing starts in recent months points to recovery. Nevertheless, economic conditions indicate that the recovery will be slow.

Industrial Production (May, Wednesday 9:15 ET)

Forecast: 0.6% Consensus: 0.8% Previous: 0.8%

May’s strong growth in the manufacturing industry, as illustrated by the ISM Manufacturing Index, is expected to translate into a significant improvement in industrial production (IP). IP will continue to benefit from the inventory adjustment process, but also from businesses’ more solid financial footing, greater financing opportunities and improved confidence. A positive surprise in Wednesday’s data would be a signal that business investment is picking up and that private demand is firming outside of fiscal stimulus.

Consumer Price Index (May, Thursday 8:30 ET)

Forecast: 0.0%, 0.1% Consensus: -0.2%, 0.1% Previous: -0.1%, 0.0%

Inflationary pressures are forecasted to remain subdued in May. Headline inflation is not expected to experience significant pressure from energy prices, while shelter prices and relatively weak demand will keep core inflation in check. Furthermore, economic slack remains, supply side price pressures are minimal and inflation expectations are well anchored. Thursday’s CPI data are expected to further substantiate the Fed’s expectation of subdued inflation in 2010 and low rates for a prolonged period.