March’s nonfarm jobs report was bad – but April’s figures could be much, much worse. How will markets deal with the news?
US: Nonfarm jobs report on Friday
Going into March’s nonfarm jobs report, analysts were expecting a headline reading of -100k, the first negative figure since September 2010. Instead it was revealed that 701,000 jobs had been lost. And that was for a period where the covid-19 damage was largely confined to the latter half of the month. The unemployment rate, meanwhile, rose from 3.5% to 4.4%, but with wage growth actually up to 0.4%.
Given that jobless claims in the US are approaching 30 million since the lockdown began, with much of that pain coming in April, Friday’s nonfarm report could be record-breaking. How the markets react, on the other hand, is less clear. Investors have quickly become accustomed to terrible data, meaning a worse than forecast set of numbers is potentially less likely to move the markets than a better than expected report.
Before we get to Friday, there is plenty of other data for US investors to work through. The latest factory orders figures arrive on Monday; the final Markit and ISM services PMIs on Tuesday; the ADP nonfarm employment change reading on Wednesday; and the usual, likely still ugly, unemployment claims numbers on Thursday.
UK: BoE posting its quarterly ‘Inflation Report’
With new Bank of England governor Andrew Bailey stating the central bank is keeping its ‘eyes open’, the Monetary Policy Committee meets for the first time since cutting interest rates to a record low 0.1% back in March.
That’s unlikely to change on change on Thursday. However, the BoE is also posting its quarterly ‘Inflation Report’ – that’ll be the first major economic report in the UK detailing the extensive damage dealt by the coronavirus pandemic.
Again, like with the US nonfarm jobs report mentioned above, it remains to be seen just how inured investors are to alarming headlines about unprecedented recessions and the like.
Ahead of that Bank of England get-together, there’s the final services PMI on Tuesday and the construction PMI on Thursday. Friday, meanwhile, is the first May Bank Holiday.
UK: Stocks to Watch
As for the corporate calendar, Smith & Nephew reports on Wednesday, followed by BT Group, Trainline, Mondi and Superdry on Thursday.
Eurozone: Another busy week for data
It is another busy week for Eurozone data. The final manufacturing PMIs arrive on Monday, while the final services readings are joined by the latest German factory orders on Wednesday. Thursday, then, sees the German and French industrial production figures, followed by a look at the German trade balance on Friday.
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