Last Week’s Highlights
Canada’s factory sales in April fall 2.58%
Canada’s factory sector posted the biggest monthly decline on record so far in April 2020. According to official data, factory sales fell 28.5% on a month over month basis in April. This was during the time social distancing and lockdown was in full force.
Factory sales were at their lowest level in 22 years. In terms of volume, manufacturing sales were down by 26%. The data for March was revised to show a 9.2% decline compared to the initial reports of a 9.8% decline.
US retail sales rebound sharply in May
The monthly retail sales report from the US showed that American consumers were back with a bang in May. Official data from the Commerce Department revealed that retail sales grew at a monthly pace of 17.7% on a seasonally adjusted basis.
This keeps the yearly retail sales in the negative territory at -6.1%. The increase in US retail sales in May marks the biggest monthly jump since 1992. However, retail spending was tepid.
BoJ keeps interest rates steady but boosts pandemic lending program
The Bank of Japan left interest rates unchanged at its latest monetary policy meeting last week. This was widely expected as economists forecast that Japan’s interest rates will be steady at -0.10%.
The central bank, however, boosted its COVID-19 spending program. It raised its spending to 110 trillion yen, up from 75 trillion earlier. Meanwhile, it left its asset purchases steady while committing to keep the yields near zero.
The Bank of England raises asset purchases but keeps rates steady
The Bank of England left interest rates unchanged at its meeting last week with just one dissenting vote from chief economist Andy Haldane. Elsewhere, the central bank voted to raise its asset purchases by 100 billion GBP to 745 billion.
The BOE said that it would continue to monitor the markets and will strive to keep inflation sustained near its 2% goal. The bank also stated that the labor market will take a while to recover due to the COVID-19 lockdown.
Upcoming Economic Events
RBNZ to keep interest rates unchanged
The Reserve Bank of New Zealand will be holding its monetary policy meeting this week. No changes are expected from the central bank as interest rates will be unchanged at 0.25%. This will be the third consecutive meeting where interest rates remain steady.
The central bank will, of course, take into account the recent GDP reports. New Zealand’s GDP fell 1.6% in the quarter ending March. This was the biggest dip in over three decades. Hence, we could expect RBNZ officials to continue to take a dovish stance in its forward guidance.
US durable goods orders to rebound in May
Monthly durable goods orders from the US are due this week. Forecasts point to a rebound in the sector. Excluding transportation, durable goods are forecast to rise 2.8%, marking a recovery from a 7.7% slump previously.
Meanwhile, headline durable goods orders are forecast to rise 10.3%, following a 17.7% decline in the month before. The forecasts remain consistent with the fact that the US economy was quick to jump back on the rails.
US GDP to show a 5% decline in Q1 2020
The revised first-quarter GDP figures are due on the same day as the durable goods report. Data forecasts show that there will be no change to the revised GDP.
As a result, the US economy is confirmed to show that it contracted 5% in the three months ending March. No revisions are forecast even for the GDP price index which is at 1.6% during the quarterly period.
Eurozone private sector to show a modest recovery
The flash or preliminary PMI figures are due out for the Eurozone this week. Forecasts show that overall, private sector business will recover slightly in the month of July.
The PMI composite is forecast to rise from 31.9 in June to 41.00 in July. Although this still keeps the data below the 50-level of the index marking a contraction, the underlying data is expected to show a slow but steady recovery in the private sector business for the eurozone.