All eyes on the US recovery

RECOVERY is under way in the US but will it be vigorous or mild? Investors will get some idea this week when the long-suffering industrial sector weighs in with its latest data.

Today's release of February wholesale inventories should show a fall of 0.3%, continuing a rundown of stocks that started last spring. But wholesale sales are expected to have risen 0.3%, setting the stage for a switch to near-term inventory accumulation.

Retail sales for January, out on Wednesday, are likely to show a 0.3% gain, after falling 0.3% the month before, as consumers seem to have increased spending, especially on household goods.

On Wednesday, Federal Reserve chairman Alan Greenspan will speak about the economy via satellite to a conference in Hawaii. Investors will be listening in case he backs away from earlier warnings that expansion is likely to be mild and short-lived. Many private sector economists see hopeful signs for a strong pace.

February's Producer Price Index is projected to show a

0.1% rise on Friday, consistent with the prior month. Even though the economy is picking up, producers have almost no pricing power and inflation remains subdued.

Industrial output, at historically weak levels for months, is expected to have risen 0.1% in February but a true manufacturing recovery will not begin until the inventory turnaround is well under way, say economists.

Data supplied by Thomson Global Markets