Possibly A Smaller Rate Cut From The Fed

ByJohn S. McClenahen In this final full week before the next scheduled meeting of the interest-rate setting Federal Open Market Committee (FOMC), data on U.S. productivity, retail sales, and wholesale prices are set to be released. Unless the numbers make a compelling case to the contrary, the FOMC is likely to lower the influential federal funds rate at its May 15 meeting -- although chairman Alan Greenspan and his colleagues may opt for a 25-basis-point reduction (to 4.25%) rather than the 50-basis point cut that has been widely anticipated. In addition to this week's economic data, when the folks at the Federal Reserve meet behind closed doors, they'll be weighing May 4's employment report from the U.S. Labor Dept. With large job losses continuing in manufacturing, payroll employment fell by 223,000 in April and the U.S. unemployment rate rose to 4.5%. The U.S. employment rate has now risen by six-tenths of a percentage point since Oct. 2000. In April, U.S. manufacturing shed 104,000 jobs, bringing the total number of jobs lost since last June to 554,000, with two-thirds of the decline occurring during the past four months. During April, large job losses continued in electrical equipment, industrial machinery, and fabricated metals. Among producers of nondurable goods, jobs continued to decline in apparel, textiles, rubber, plastics, and printing and publishing.