US consumption and manufacturing have posted significant improvements in May, however, Josh Nye, Senior Economist at RBC observes that the post-coronavirus reality will weigh on a full economic recovery.
Key quotes
“While gradual easing of physical distancing measures is allowing Americans more opportunities to spend, restrictions continue to limit traffic at non-essential retailers and restaurants. Those measures are also keeping manufacturers from operating anywhere near full capacity.”
“Both sectors (retail and manufacturing) are likely to recover further in the coming months as regulations continue to be eased. However, we expect some physical distancing measures will remain in place, preventing a full recovery in retail, food services and manufacturing this year.”
“We also think consumer spending will be held back by still elevated unemployment (the jobless rate still seen at 7% by Q4/20) as government support begins to fade.”
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