Following last Wednesday’s news that the economy shrank by 2% in the first quarter, the UK is facing another potentially rough run of data this week.
UK: Unemployment numbers for April
There’s a lot on offer in the UK this week, starting with Tuesday’s jobs report. While the wage growth and unemployment rate readings won’t be the most up to date, they will still reflect the sudden impact lockdown had on the economy in the second half of March.
More relevant is the claimant count change figure, i.e. the UK’s version of the US jobless claims data. Last month analysts were expecting a huge surge in the number of people claiming unemployment-related benefits, with estimates sitting at 170,000. Instead the reading came in at 12,100, a figure that was actually materially lower than average monthly number from 2019.
That likely means the pain has simply been delayed until April, the first full month under lockdown and the period covered in Tuesday’s release. It will also be interesting to try and gauge how much the government’s furlough scheme mitigated any potential job losses.
The latest inflation readings then follow on Wednesday, with the previous month’s 1.5% the number to beat, before the all-important flash manufacturing and services PMIs for May on Thursday. April saw readings of 32.6 and 13.4 respectively, so some nasty numbers may be on their way. Finally April’s retail sales are released on Friday, following the 5.1% slump seen in March.
UK: Stocks to Watch
As for the corporate calendar, Imperial Brands and Topps Tiles report on Tuesday; Marks & Spencer and Severn Trent on Wednesday; Pets at Home and Tate & Lyle on Thursday; and Burberry and Future on Friday.
US: Renewed tensions with China
Things have started to take a turn stateside. A major blow came from Federal Reserve chair Jerome Powell, who appeared to take negative interest rates off the table last week, instead urging further fiscal stimulus – something that is unlikely to be forthcoming due to the fractious state of election year US politics.
There’s also the freshly brewing tensions between the US and China. Trump tweeted last Wednesday that dealing with the rival superpower is ‘a very expensive thing to do’, while going on to mention how ‘100 Trade Deals’ wouldn’t make up for the losses caused by the ‘Plague from China’.
The situation between the two nations is in danger of spiralling out of control. Trump’s comments came after a report in the Global Times stating Beijing is ‘extremely dissatisfied’ with America’s ‘abuse of litigation’ against China over the covid-19 epidemic, and that the country is ‘mulling punitive countermeasures against US officials, entities and state officials’.
As investors keep an eye on those tensions tensions, the economic calendar sees Tuesday’s building permits and housing starts and Wednesday’s Fed meeting minutes followed by a blockbuster Thursday.
The usual jobless claims are joined by the Philly Fed manufacturing index and, crucially, the flash manufacturing and services PMIs for May.
Eurozone: Key Economic Dates
Over in the Eurozone, the ZEW economic sentiment readings arrive on Tuesday, followed by the consumer confidence and inflation figures on Wednesday. Bank holidays in France and Germany then delay the region’s flash manufacturing and services PMIs until Friday.
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