Economic Data Expected to Show Some Softening

One report due out this week is expected to show that retail sales fell last month, with economists polled by Reuters forecasting a 0.6% decline and economists surveyed by Bloomberg News predicting a 0.7% dip.

Another report may indicate that manufacturing production stalled in June. And economists predicted that inflation data could show that consumer prices have drifted higher.

As for industrial production, analysts predict the numbers will be flat for last month. The Federal Reserve’s data is expected Thursday.

“The economy has entered a soft patch,” said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. “If that soft patch leads businesses to cut back on the recent spate of hiring, then it will be a worry.”

Other data will also attract attention this week -- but the real focus will be on earnings reports from some key companies.

In fact, worries that companies may warn of slowing profit growth in the year’s second half could cause the market to drift. “This is what’s known as the summer doldrums,” said Larry Wachtel, senior vice president and market analyst at Wachovia Securities.

Corporate chief executives are confident, though. The Conference Board said last week that its index of CEO confidence slipped to 70 in the second quarter from 73 in the first three months, the strongest reading in 20 years.

Excluding automobiles, retail sales in June probably grew 0.2% after a 0.7% jump in May, according to the Bloomberg survey. Wal-Mart Stores Inc., the world’s largest retailer, said last week that June sales rose 2.2%, the smallest gain in more than a year.

Sales of Father’s Day gifts and summer items such as pool toys were less than expected. Gasoline prices, which in June were about a third more than a year earlier, crimped Wal-Mart shoppers’ budgets, Chief Executive H. Lee Scott said.

The producer price index for June, due Thursday, will give a reading on inflation at the producer, or wholesale, level. The PPI tracks the prices of product components as goods move through the manufacturing and distribution process.

The forecast for the overall PPI calls for a gain of 0.2% in June, according to economists polled by Reuters. Core PPI, which excludes volatile food and energy prices, also is expected to rise 0.2%.