Economic Analysis

Corona virus caused economic chaos all over the world. Although the rules for containing the closure have begun to decline, economic figures, such as gross domestic product and employment, remain bleak.

In the UK, first quarter GDP fell 2.0%, the first drop in three quarters. Analysts had expected a 2.6 percent decrease. Monthly gross domestic product decreased 5.8% in February, but this exceeded expectations by -7.9%. In Germany, the economy contracted by 2.2% in the fourth quarter after losing 0.1% in the third quarter. Eurozone GDP also decreased, as the second estimated reading fell 3.8%, confirming the initial reading. The German CPI accelerated to 0.4% in April, up from 0.1% a month ago. In Australia, employment figures were poor in April. The economy shed 594.3 thousand jobs and the unemployment rate rose to 6.2%, up from 5.2% a month ago.

In the US, inflation fell lower in April, as the economy continued to slide under the weight of the Corona pandemic. The CPI fell 0.8%, down from -0.4% the previous month. Core reading fell 0.4%, down from -0.1% in the previous version. Both numbers misjudged them. Unemployment claims continue to decline and decreased to less than 3 million last week, by issuing 2.98 million.

RBA Monetary Policy Meeting Minutes: Tuesday, 04:30 am. The minutes of the Reserve Bank of Australia meeting will provide details of the policy meeting earlier this month. At that meeting, policymakers held the interest rate at 0.25 percent, citing uncertainty about the future of the economy.

British Employment Report: Tuesday, 12:00 pm. Despite the mass closure due to the Coronavirus, the British labor market remains relatively unsound. Wage growth fell to 2.8% in February, down from 3.1% in the previous version. This is the lowest gain since August 2018. The decline is expected to continue in March, with a 2.7 percent forecast. Unemployment claims actually decreased in March from 17.3K to 12.1K. Analysts had expected a significant decline of 170K. We are waiting for April data now. The unemployment rate is expected to jump to 4.4%, up from 4.0%.

British Inflation Report: Wednesday, 09:00 am. Consumer price inflation continues to fade, dropping to 1.5% in March. This was a drop of 1.5% and was the weakest reading in four months. The core figure fell from 1.7% to 1.6%. In April, the projection was 0.9% for the main reading and 1.4% for the Core CPI.

Eurozone inflation: Wednesday, 12:00 pm. Inflation fell sharply as the euro zone economy was paralyzed by the spread of Corona disease. The preliminary reading for April fell to 0.4%, and the final reading is expected to confirm this figure.

UK Manufacturing PMI: Thursday, 11:30 am. April's final reading was 32.6, lower than the 42.0 estimate. May's initial reading is expected to drop to 35.1 points as level 50 separates contraction from expansion.

British PMI: Thursday, 11:30 am. Markit's future indicators for the British economy culminate in the publication of the services sector. The nation's largest sector was affected by this drop, dropping to 13.4 points in April. The initial reading for May is 20.0 points.

American Unemployment Claims: Thursday, 15:30 pm. Unemployment claims were dropping every week, but last week's figure of 2.98 million shows that the job market is still very volatile. Another high figure is expected, with an estimate of 2.4 million.

US Manufacturing PMI: Thursday, 16:45 pm. The manufacturing sector continues to point to deflation. The Manufacturing PMI came in at 36.1 in April, and the Initial May reading stood at 37.5 points.

Eurozone PMI indices: Friday, 10:15 in France, 10:30 in Germany, and 11:00 in the entire euro area. The services sector was in a strong slump, with severe contractions reported throughout the Eurozone in April. The German PMI came in at 16.2, the euro zone release was 12.0, and the French reading was at 10.2. Initial estimates for May are 26.2 for Germany, 23.9 for the Eurozone, and 28.8 for France. The manufacturing sector is in better shape, but still showing deflation, with much lower readings than level 50, which separates deflation from expansion. The German PMI came in at 34.5, the euro zone at 33.4 and the French at 31.5. The preliminary reading forecast for May is 39.0 for Germany, 38.0 for the Eurozone and 35.6 for France.