June 11. The number of applications for unemployment benefits in the US fell more than forecast According to the US Department of Labor, the number of applications for unemployment benefits continued to decline last week, although it may take a lot of time to fully recover the labor market after a pandemic. The number of Americans applying for unemployment benefits for the first time in the week of June 6 was 1.542 million. Analysts surveyed by Bloomberg, on average, predicted a decrease in the number of applications to 1.55 million. The number of applications is gradually decreasing after reaching a historical maximum of 6.867 million in the week ended March 28. The number of people continuing to receive unemployment benefits fell less than expected to 20.929, compared with 21.268 million a week earlier. In May, the number of jobs in the US economy increased by 2.509 million. Unemployment fell to 13.3% from 14.7% in April.
June 15. UK Central Bank may extend £150 billion QE program on Thursday On Thursday, a meeting of the Bank of England board will take place, during which the regulator can expand the program of «quantitative easing» (QE) by 150 billion pounds. This decision aims to continue the repurchase of financial assets from the market amid possible economic problems due to the negative impact of the coronavirus pandemic and the country's exit from the European Union (Brexit). On March 19, the British Central Bank has already increased the amount of assets bought back from the market to 645 billion pounds from the previous 435 billion, and also lowered its key rate by 15 basis points to 0.1%. The next expansion of the QE program will continue the ransom until the beginning of October. Economists speculate that the UK economy will continue to be much lower in the third quarter, even despite the expected start of economic recovery by easing restrictions imposed by the coronavirus pandemic.
June 18. Bank of England maintains interest rates and expands QE program Today, a meeting of the Board of the Bank of England took place, at which the regulator kept the key rate at 0.1%, as expected. In addition, the British Central Bank increased its bond purchase program by £100 billion ($125 billion) to 745 billion. The authorities hope that such actions will help the country's economy recover from a record downturn in March and April caused by quarantine. Representatives of the regulator noted that the Bank of England will spend an additional 100 billion on state bonds, but will slow down the pace of purchases. A new program target of £745 billion is expected to be reached by the end of the year. The interest rate has been at 0.1% since March 19. In March, the regulator cut the rate twice during extraordinary meetings – first by 50 basis points, to 0.25%, and then by 15 basis points, to 0.1%.
June 18. Bank of England maintains interest rates and expands QE program Today, a meeting of the Board of the Bank of England took place, at which the regulator kept the key rate at 0.1%, as expected. In addition, the British Central Bank increased its bond purchase program by £100 billion ($125 billion) to 745 billion. The authorities hope that such actions will help the country's economy recover from a record downturn in March and April caused by quarantine. Representatives of the regulator noted that the Bank of England will spend an additional 100 billion on state bonds, but will slow down the pace of purchases. A new program target of £745 billion is expected to be reached by the end of the year. The interest rate has been at 0.1% since March 19. In March, the regulator cut the rate twice during extraordinary meetings – first by 50 basis points, to 0.25%, and then by 15 basis points, to 0.1%.
June 22. Home sales in the US secondary market in May decreased by 9.7%, worse than forecast Today in the United States published a report of the National Association of Realtors (NAR), traditionally important for the dynamics of the US dollar in the context of the crisis caused by the coronavirus pandemic. According to recent data, home sales in the secondary market in May fell by 9.7% compared with April, to 3.91 million. Analysts polled by Reuters expected a 3% drop in the number of such deals, to 4.12 million. In addition, the share of distressed real estate in this market in May amounted to 3%, which generally corresponds to the level of April, but above 2% in May 2019. Sales of single family homes amounted to 3.57 million, in monthly terms there was a decrease of 9.4%, in annual terms – by 24.8%.
June 23. Economists significantly worsen German GDP drop forecast this year The Council of Economic Experts under the German government has adjusted the forecast for German GDP for the current year downward. Now economists expect the country's economy to collapse by 6.5% in 2020. Council Chairman Lars Feld said the coronavirus pandemic will lead to the worst collapse of the German economy in the entire existence of the Federal Republic. At the same time, Feld suggests that the German economic recovery will presumably begin in the summer, and a return to growth – in early 2021. The return of economic indicators to the levels before the pandemic begins is expected only in 2022. Recall that earlier economists considered a five-week lockdown and a 2.8% reduction in GDP the most likely scenario. In the worst case scenario, experts predicted a collapse of the economy in 2020 by 5.4%.
June 25. The final estimate of US GDP in the I quarter: a fall of 5% According to the final estimate of the US Department of Commerce, the country's GDP in the first quarter fell by 5% in annual terms. The indicator coincided with the forecasts of analysts and the second assessment of the department. The first estimate suggested a decrease of only 4.8%. At the same time, exports fell by almost 9% and imports by 15.7%. In the first quarter of 2019, US GDP growth in annual terms was 3.1%, in the second – 2%, in the third – 2.1%, in the fourth – also 2.1%. The decrease in US GDP was noted for the first time since the first quarter of 2014, when this decrease amounted to 1.1%. It also became the strongest since the fourth quarter of 2008, when the country's economy shrank by 8.4%. Experts point out that social isolation measures in response to the coronavirus pandemic had a negative impact on the American economy in the spring of 2020.
June 26. US consumer income down 4.2% in May, better than forecast According to the Bureau of Economic Analysis of the US Department of Commerce, consumer income in May fell 4.2% compared with April. Consumer spending rose 8.2% on a monthly basis. Analysts had forecast a 6% decline in revenue and a 9% increase in spending. Growth in consumer spending was a record, but experts are confident that this trend will not last long: millions of Americans will soon cease to receive increased unemployment benefits. In April, consumer spending fell by a record 12.6%. An estimate of the income and expenses of Americans in May was influenced by the quarantine response to the spread of COVID-19. The ministry noted that government payments aimed at restoring the economy were still made, but in smaller volumes than in April.
June 29. More than 40% of S&P 500 companies abandoned forecasts due to coronavirus More than 40% of the S&P 500 companies withdrew quarterly or annual forecasts due to the uncertainty surrounding the outbreak of coronavirus. As the reasons, some of them noted the likelihood of new outbreaks of the disease, changes in consumer behavior and additional costs. According to The Wall Street Journal, the stocks of the companies that made this decision have fallen in price by 18.2% since the beginning of the year, while the S&P 500 value fell by 6.9%. Many companies that have withdrawn forecasts are most affected by the industry pandemic – the telecommunications, entertainment, automotive, and industrial goods sectors. However, among these companies there are those who have benefited from the effects of the pandemic. For example, this is the Kroger Co. supermarket chain, whose sales have jumped, and capitalization has increased by almost 13% since the beginning of the year. Payment system PayPal Holdings Inc. over the period of the pandemic, it added 58% against the backdrop of an increase in online trading. Uncertainty is also associated with the lifting of quarantine measures in the United States. Texas and Florida reinstated some restrictions last week due to a spike in new cases. Many S&P 500 companies updated their forecasts due to a coronavirus outbreak: 154 companies worsened expectations in at least some indicators, while 28 improved forecasts.
30.06. US consumer confidence in June turns better than forecast According to analysts at Conference Board, the US Consumer Confidence Index in June rose to 98.1 points from a revised May figure of 85.9 points. Analysts had forecast an increase to 91.8 points from an initial May value of 86.6 points. The US economic expectations index in June rose to 106 points from a revised May figure of 97.6 points. The initial indicator of the previous month was 96.9 points. The economic conditions index in the reporting month rose to 86.2 points from the revised May value of 68.4 points. The initial figure last month was 71.1 points.
