Last Week’s Highlights
Australia’s unemployment rate rises to 6.2%
The latest labor market statistics from Australia saw the national unemployment rate rising to 6.2% in April. This was higher than the unemployment rate for March, which was 5.2%.
However, the data was not as bad as forecasts of an increase to 8.3% for the period.
That said, the Australian economy lost 594,300 jobs during the month, which was comparatively higher than the forecasts of 575,000 jobs lost. The full-time employment fell by 220,000 and there were declines even in the part-time employment sector.
China’s industrial production rebounds in April
Industrial production in China saw a rebound in April, rising 3.9% on a year over year basis. The rebound in April saw declines of 1.1% on the year in March. The data also beat estimates as economists were betting that industrial production would rise just 1.5% on the year.
On the downside, China’s retail sales fell 7.5% on the year. This was slower than the 15.8% increase in March. The data comes during a period when China was just coming out of easing the pandemic restrictions.
Eurozone economy contracts at the fastest pace on record
The first quarter GDP reports for the eurozone saw the economy contracting at the fastest pace on record. Data from Eurostat revealed the preliminary readings on the GDP data for the period covering the first three months of the year.
Gross domestic product was down 3.8% on a sequential basis, following a modest 0.1% increase in the final quarter of 2020. On a yearly basis, the eurozone economy is down 3.2% after rising one percent on an annual basis in the fourth quarter of 2019.
US Import prices fell 2.6% in April
The import price data for April for the United States saw a steep decline. The data from the Labour department saw import prices falling by 2.6% in April after a revised 2.4% decline in March. But the data was better than economist forecasts that import prices would fall by 3.1%. Exports fell 3.3% after a revised 1.7% in March.
Powell: Federal Reserve could take more stimulus measures
Jerome Powell, Chairman of the Federal Reserve, said last week that the central bank was continuously assessing the impact of the pandemic.
Powell said that the central bank could take additional measures as growth and productivity stagnates. He did, however, rule out negative interest rates, noting that the central bank was not considering them.
Powell’s comments come after the US Congress passed a new $3 trillion stimulus plan.
US Retail sales plunge 16.4% in April
Retail sales in the US fell sharply to post record lows in April amid the economic lockdown. According to data from the Bureau of Labour Statistics, retail sales fell 16.4% on a monthly basis, eclipsing the 8.3% decline in April. This was the steepest decline since 1992.
Social distancing, travel restrictions caused severe disruptions to retailers. Sales at department stores, bars, and restaurants fell more than half, while sales at clothing stores fell 90%. However, sales with online retailers rose 20% on the year.
Upcoming Economic Events
Japanese economy to slip into a technical recession
Japan will be releasing its quarterly GDP report this week. Economists are predicting that the economy will fall 1.2% on a quarterly basis for the period ending March 2020. As a result, this will see the annualized GDP contracting at a pace of -4.6%.
With a decline for this period, Japan’s economy will see two consecutive quarters of contraction. This will put the Japanese economy into a technical recession.
UK labor market forecast to remain resilient
The UK labor market is forecast to show that the unemployment rate will fall to 3.9% in April. The decline in the unemployment rate comes after rising to 4.0% in the month of March.
Average earnings, including bonuses, are forecast to rise slightly to 2.9% while staying steady on earnings that exclude bonuses. Later in the week, the UK consumer and producer prices index data are also due.
Headline CPI is forecast to hold steady at 1.5% on the year while core CPI is forecast at 1.6% in April.
Eurozone inflation to rise slightly in April
Consumer prices in the eurozone are set to rise slightly in April. Economists forecast that headline inflation will rise 0.5% on the month and 0.4% on the year. The core inflation rate, which strips the volatile food and energy prices, are set to rise 1.0% on the year and 1.2% on the month in April.
The forecasts are slightly better than the initial expectations that consumer prices were to drop due to the fall in economic activity.
EU business PMIs to rebound in May
Preliminary business indicators from the Eurozone for the month of May will be on the tap this week. Economists predict that PMI activity from IHS Markit will show a slight improvement, compared to the declines in April.
However, the PMI readings will still remain well below the 50-level of the index. This means that the business activity in the eurozone will continue to contract for the month of May. The eurozone economy is unlikely to recover from the contraction in business activity anytime soon.