Economic numbers remain soft, as the major economies try to regain their footing. The Covid-19 pandemic has caused a severe economic collapse, but lockdown measures are starting to be lifted, raising hopes of an economic recovery.
German and eurozone PMIs climbed higher in May, pointing to an improvement in the manufacturing and services sectors. Still the readings point to continuing contraction. German Manufacturing PMI improved from 34.5 in April to 36.8 while the eurozone indicator rose from 33.4 to 39.5 points. The services sector showed improvement after a disastrous April. German Services PMI climbed from 16.2 to 31.4, while the all-eurozone indicator jumped from 12.0 to 28.7 points.
In the UK, the labor market staggered last week as unemployment claims rocketed to 856.5 thousand in April. This was much higher than the forecast of 675.0 thousand. Wage growth slipped to 2.4% in March, down from 2.7% a month earlier. The unemployment rate dipped to 3.9%, well below the estimate of 4.4 percent. Retail sales plunged 18.1% in April, worse than the estimate of -15.8 percent. Inflation sank to 0.8% in April, its lowest level since August 2016. This was well below the March reading of 1.5 percent.
The RBA minutes noted that Australia is facing an “unprecedented” economic contraction due to Corvid-19. At the same time, policymakers stated that the economic blow could be softened with substantial fiscal and monetary stimulus
In the U.S., the final read for Manufacturing PMI in March came in at 41.5 points, and the initial estimate for April came in at 39.8 points. A reading below the 50-level points to contraction.
- German Final GDP: Monday, 6:00. Germany is the locomotive of the eurozone, but the economy has been hit hard by the Corvid-19 pandemic. The initial estimate for Q1 GDP came in at -2.2% and the final estimate is expected to confirm this release.
- German Prelim CPI: Thursday, All Day. German CPI posted a gain of 0.4% in April. Analysts are projecting inflation to fall to 0.1% in the initial May reading.
- French Preliminary GDP: Friday, 6:45. The eurozone’s second-largest economy contracted by 5.8% in Q1 and the second-estimate reading is expected to confirm this figure.
- US GDP: Thursday, 12:30. The U.S. economy has been hit hard by the Corvid-19 pandemic, and the initial read for Q1 showed a sharp contraction of 4.8 percent. The second estimate is expected to confirm this figure.
- US Unemployment Claims: Thursday, 12:30. Unemployment claims have been dropping slowly, pointing to a slight improvement in the employment sector. Last week, unemployment claims fell to 2.43 million, down from 2.98 million a month earlier. Still, this figure was higher than the estimate of 2.40 million.
- Eurozone Inflation: Friday, 8:00. Eurozone inflation remains at low levels. In April, the headline figure came in at 0.3%, while core reading came in at 0.9%. The second-estimate figures are expected to confirm the initial readings.
- Canadian GDP: Friday, 12:30. Canada is unique in that it publishes Gross Domestic Product figures on a monthly, rather than quarterly basis. The economy was stagnant in February, falling from 0.1% to 0.0%. We now await the March data.
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Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar analysis
- USD/JPY forecast – the outlook for dollar/yen
- AUD/USD forecast – projections for the Aussie dollar.
- USD/CAD forecast – Canadian dollar predictions
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