Weekly Outlook (1 - 5 June)

April’s U.S. non-farm payrolls report confirmed a record number of Americans lost their job. However, the released number came in slightly below expectations at 20.5 million. Since then the weekly jobless numbers have continued to rise, pushing up to 40milion people. Friday’s May non-farm payrolls report is also expected to be a million number. Another 7 million jobs are expected to be lost. The estimate of the total number of jobs lost over the last two months could land to over 50 million, pushing the unemployment rate up from 14.7% close to 20%.

In Europe, the recent German constitutional court decision raised serious questions around the legitimacy of the new PEPP ECB programme, and its ability to do much more than it’s already doing now. The announcement of the €500bn European recovery fund by German chancellor, Angela Merkel, and French president, Emmanuel Macron, has generated headlines, but it still remains a work in progress.

So far global services PMIs figures were horrific. However, market analysts expect a rebound in May’s economic activity. This already appears to be supported by the recent flash PMI numbers from Germany, France, and the UK. The recent numbers from France, Germany, and the UK improved from record lows in April to 29.4, 31.4, and 27.8 respectively. Spain and Italy are also expected to improve from their record lows of 7.1 and 10.8, but the numbers will still point to a significant decrease in Q2. For Spain and Italy, the biggest worry is that they rely heavily on tourism, whose recovery will be slow, as tourists restrain themselves from traveling.