Coronavirus Non Farm Payrolls
The Nationwide house report showed prices grew by 3.0% in the year to March from, up from 2.3% previously, but the housing market has been put on ice until further notice. The Construction PMI has been shifted to April 6th, but this morning’s services PMI could show an even sharper downturn than in the flash data given the shutdown in all but the non-manufacturing sector. Sterling held firm, including the periods where global risk appetite deteriorated and higher oil prices certainly helped. The Pound hugged the 1.2400 mark against the Dollar and pushed the Euro to 3-week lows near 1.1365 before laterpeaking at 1.1425.
There were still major concerns over the coronavirus outbreak with the UK death toll continuing to rise and controversy over testing numbers, but at least there’ll be no new lockdown measures before Easter. The government also announced medium-sized businesses will be eligible for the business support scheme and relaxed criteria for small-business support. Today’s afternoon action will likely come from over the pond with the potential for very high volatility today.
US jobless claims surged again to 6.65mn in the latest week from a revised 3.31mn the previous week. This was very substantially above consensus forecasts and a record high for the second week as claims in California alone posted over 800,000 claims. The jobless data increased fears that the unemployment rate could surge to above 10% within the next 2 months. The latest Challenger data recorded a sharp increase in layoffs for March to over 220,000 and the dollar made net gains.
The US monthly jobs report will be released today with expectations that payrolls will have registered a decline of around 100,000 for the month. The overall impact is liable to be limited, however, as the survey date was March 14th, before most lockdowns were implemented.
The February trade deficit declined to $39.9bn from $45.5bn previously, the lowest reading for over 3 years as imports from China slumped while the ISM New York business conditions index dipped to 12.9 from 51.9. The dollar overall made net gains against the Euro declining to lows below 1.0850 and was held just below this level on Friday with the US currency holding a firm tone amid an underlying lack of confidence in the global outlook.
Spain recorded an increase in jobless claims of over 300,000 for March, maintaining fears over the economic outlook and latest data recorded a further increase in coronavirus cases of over 6,000 to 110,000 with the death toll passing 10,000. There were also further sharp increases in Italy and Germany. The KfW development bank also forecasted that the German economy would contract 10-15% for the second quarter of 2020.
Leaders in the old continent remain at loggerheads over the economic relief for the crisis. Without an immediate solution to the fast-evolving problem, the common currency has further room to the downside against the Dollar, alongside its other major counterparts. Markit’s final Service PMI Indexes will likely confirm this weakness if data fails to hit expectations.