Following the month’s nonfarm disappointment, the Dow Jones and the rest of the US markets will be hoping for stronger signs of an economic recovery this week.
US: How fast is US inflation rising?
Friday’s nonfarm reading was a shocker. Though, in normal times, the creation of 266,000 jobs would be very strong, in the current climate, and compared to expectations of nearly 1 million additions, it’s almost a disaster. Especially since April’s reading was revised from 916,000 to 770,000.
This does mean, however, that worries over the Federal Reserve tapering stimulus any time soon have eased somewhat, as Jerome Powell is now a few months off – at least – from seeing a ‘string’ of robust jobs reports.
Attention will now turn this week to the CPI and retail sales data on Wednesday and Friday respectively.
Rising inflation has been a hot topic in 2021, with fears of said inflationary pressures – and what that would mean for interest rates – causing some startling losses at points in the last few months. The most recent figures showed a steady climb, from 0.4% to 0.6% – any increase sharper than that this month could cause a wobble in confidence.
As for retail sales, they smashed it out of the park last month, surging from -2.7% to 9.8%, zooming past the forecast 5.8% while doing so. It may be hard to match that performance this Friday, though anything similar will be cause for celebration.
Elsewhere, the JOLTS job openings figure is on Tuesday, with the usual jobless claims – which finally ducked under half a million last week – on Thursday, and industrial production and consumer sentiment on Friday.
UK: Focus on the economy
The UK saves all its good stuff for Wednesday, when it finally reveals the first look at its Q1 GDP reading.
Though the Bank of England is forecasting growth of 7.25% for the full year, for the first quarter the economy is expected to have contracted by around 1.5% due to the severe lockdown restrictions in place, especially across January and February.
Alongside the quarterly GDP figure on Wednesday is the monthly reading, as well as the industrial and manufacturing production numbers.
As for corporate updates, Morrisons reports on Tuesday, with Coca-Cola HBC and Compass Group on Wednesday, and Burberry and Hargreaves Lansdown on Thursday.
It’s not the busiest week in the Eurozone, with the ZEW economic sentiment readings on Tuesday, region-wide industrial production on Wednesday, and the most recent ECB meeting minutes on Friday.
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