Investors have a shorter week ahead of them as May ends. Monday is a public holiday in the UK and the US also has a public holiday so market activity will be slower.
At the beginning of June, however, there is still a lot to do.
For now, much of the focus will be on the final Global Services Purchasing Managers Index (PMI) numbers for May as economies reopen and the world’s hardest hit sector regains its foothold.
The UK and America saw the most positive economic recovery in terms of services. The PMI for UK services is expected to improve to 62.2 as more stores reopen in May, while US ISM services are expected to stay steady at 62.7.
Manufacturing and Construction PMIs are also published for the UK and Europe.
Elsewhere: The Organization of Petroleum Exporting Countries and its allies (OPEC +) will hold their next monthly meeting on June 1st. It is not yet known whether the 13 members will increase production or not. OPEC + announced earlier this year that it would gradually increase its supply to 2 million barrels per day (bpd). Analysts expect the members to keep the current plan and increase the remaining 840,000 bpd in July.
UK: consumer credit, mortgage approvals, coronavirus spotlight
It’s been a sluggish week for the UK in terms of economic data as stock markets close on Monday due to the May bank holiday.
Coronavirus and the final phase of the roadmap outside of the lockdown will be on everyone’s lips. Especially after Prime Minister Boris Johnson dampened plans to fully reopen the economy on June 21.
Johnson warned last Thursday that the Indian variant of coronavirus could push back the reopening of England as the strain, first found in India, quickly spread across the UK.
“All eyes will be on the government’s decision,” said Alpesh Paleja, chief economist at the CBI. “If the restrictions continue to lift, we shouldn’t lose sight of how fragile the decision is.” For some companies, the situation will persist and the government will need to watch briefly what assistance may be required to proceed. “
The starting shot will be given on Tuesday, the final PMI for manufacturing in May. Net lending to individuals and mortgage approval numbers will follow on Wednesday. With the final service PMI on Thursday and the construction PMI closing the week on Friday.
Mortgage lending hit a record high of £ 11.8 billion (US $ 16.7 billion) in March, just before Chancellor Rishi Sunak extended the stamp duty vacation to summer. Real estate prices and mortgage demand have remained robust since then, reaching the level last seen before the 2009 financial crisis.
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USA: Non-agricultural payrolls, PMIs for services and manufacturing, data on unemployment
All eyes will be on the US non-farm jobs report released on Friday after disappointing April results caught investors and markets off guard.
990,000 new jobs were expected to be created in April, based on the 916,000 in March. However, the April figure was 266,000, with the March figure lowered to 770,000.
Analysts say the lower number is likely due to “the generous increase in unemployment benefits as a result of the March stimulus package,” which is comforting those who have not returned to the workforce.
“These benefits are likely to slow the US job market significantly until they expire in September, at a time when job vacancies are already at a record high of 8 million,” said Michael Hewson, chief analyst at CMC Markets. “This, in turn, could add to an element of wage inflation as employers try to get workers back into work by raising wages.”
It is estimated that over 600,000 new jobs will be created in May, while the unemployment rate is projected to decline to 5.9% after unexpectedly rising to 6.1% in April.
That being said, there are the ISM and final Markit PMIs for manufacturing on Tuesday, followed by the service PMIs on Thursday. The latest factory order data will then also be displayed on Friday.
EU: inflation, service PMIs, German unemployment figures
It’s a busier week in the eurozone this week, with some releases on the way.
As with the rest of the western world, the region wakes up Tuesday alongside German unemployment change data to its latest manufacturing PMIs.
The regional PPI number is displayed on Wednesday. Then the service PMI on Thursday and the monthly retail sales on Friday.
Services were more positive for the zone’s two largest economies, Germany and France, with services rising above 50 for the first time since August last year.
The Spanish service sector also improved to 54.6 in April, while Italy’s activity was more subdued at 47.3 due to various COVID curfews and other restrictions.
“One of the key takeaways from previous reports has been a sharp increase in prices paid or input costs, which currently does not appear to be fully passed on,” said Hewson. “The employment components have also recovered, although business activity in Europe was more subdued due to higher infection rates.”
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