DE | Weekly | Global Markets | Strong Jobs Regrowth and the Second Wave—Result Mixed Outlook – 7/10/20

Posted July 10, 2020 by rvillareal

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Strong Jobs Regrowth and the Second Wave— Result Mixed Outlook

Recovery May Be Dampened As Some States Roll Back Reopenings

Daily cases of COVID-19 have reached a record high of over 60,000, triggering some hot spot states to reinstate virus-containment measures and raising the risk of a relapse in a Recovery that appears to have just begun. This is a now non-economic Macro Risk to the economy of size!

Texas, Florida and California have closed down bars again and dining-in. Other states are delaying reopening steps. These actions can affect the Recovery path of the economy and will negatively impact economic activity in July.

As scary as a Second Wave of increased infections can be, the good news is that the worst for the U.S. economy probably is over.

Activity figures for May have been exceptionally strong.

This was particularly the case for the labor market in May with Nonfarm Payroll jobs up a huge 4.8 million; the Unemployment Rate down to 11.1% from 13.3%; a huge 4.9 million persons found work; and there was a large 1.7 million rise in the Labor Force.

Although, net, 13.3 million jobs have been lost since March, the Unemployment Rate is still in double-digit territory, way up from a 50-year low of 3.9%; 17.8 million persons in the Household Survey are out of work; the Labor Force Participation Rate (LFPR), though up over the past two months, to_61.5% from 60.2%, is still very low compared with where it was. But, the labor market clearly is signaling a Recovery to go with the Reopenings that have been occurring after a shutdown of the economy and the beginning of a long road back to pre‑Coronavirus Shock levels.

Other high-frequency data also have signaled Recovery after the economic collapse. In May, there was a huge 17.7% MoM surge in Retail Sales. Personal Spending rose 8.2% MoM following a 12.6% decline in April. Industrial Production increased 1.4% MoM. Existing Home Sales moderated to 3.91 Mil. Units following an initial surge to 4.33 Mil. Units in April. The Conference Board’s Consumer Confidence Index in June rose to 98.1 from 85.9. And, the ISM Non-Manufacturing Purchasing Manager’s Index (PMI) jumped to 57.1 in June from 45.4 in May.

Table 1

Key U.S. and Global Coming Economic Indicators and Events—

“Look Ahead” (July 6 to July 17)

	Release	Time (EST)	Act. / DE / Consen.	Comment/Event/Venue
U.S.	ISM N.M. (Jun)   PPI (Jun)     CPI (Jun)   Ind. Prod. (Jun)     Retail Sales (Jun)   Housing Starts (Jun)   U-M Sentiment (Jul)	July 6-July 10 Mo 10:00 am   Fr 8:30 am   July 13-July 17 Tu 8:30 am   We 9:15 am     Th 8:30 am   Fr 8:30 am   Fr 10:00 am	48 / 49.1   0.3% / 0.4% MoM     0.9% / 0.6% MoM   2.8% / 4% MoM     6.1% / 5% MoM   1.15/1.18 Mil. Units   85	Sentiment in the Services Sector improved on store reopenings. Producer Prices likely rebounded.     Headline CPI expected to have jumped back on higher oil prices. Industrial Production continued to recover as more states reopened. Future uncertain on new shutdowns. Slower recovery in June after an initial surge in May; late June weakening? Housing Market likely jumped on the rebound in demand. Sales may be delayed though Starts up. Consumer Sentiment expected to rise only modestly in early July.
EUR   GER	Retail Sales (May)   Factory Orders (May) Ind. Prod. (May)	July 6-July 10 Mo 5:00 am   Mo 2:00 am Tu 2:00 am	10.5% MoM   18% MoM 12% MoM	Early German Consumption data suggested a robust rebound. Industrial Sector likely finally picked up after two consecutive monthly contractions.
CHN	CPI (Jun) PPI (Jun)     Exports (Jun) IP (Jun) Retail Sales (Jun) Fixed Asset (Jun) GDP (2Q)	July 6-July 10 We 9:30 pm We 9:30 pm   July 13-July 17 Mo TBD We 9:30 pm We 10:00 pm We 10:00 pm We 10:00 pm	2.4% / 2.6% YoY -3.3% / -3.2% YoY     -1.3% / -1.1% YoY 4.7% / 4.8% YoY 0.9% / 0 YoY -4.2% / -3.4% YoY 2.13% / 2.6% YoY	Both CPI and PPI are set to improve steadily with small changes amid increasing reopens and rises in Producer Prices. Cooling food prices. June Exports likely improved with worldwide reopens. June IP and RS both set to gain despite resurgence of infections. Fixed Asst Inv. also likely to improve, but sill in contraction. 2Q GDP is set to rebound back to positive growth, QoQ and YoY.
JPN	HH Spending (May) Labor Earnings (May) Core Orders (May)     Tert. Ind. Act (May)	July 6-July 10 Mo 7:30 pm Mo 7:30 pm We 7:50 pm   July 13-July 17 Mo 12:30 am	-9.9% YoY -0.5% YoY -8% MoM     -6.1% MoM	May Household Spending and Labor Cash Earnings are likely to decelerate with gradual Reopenings. Core Orders set to continue falling.     May Tert. Ind. Act. Is likely to keep contracting amid stringent lockdowns.