US markets mellow following dire economic dataOn May 16, 2020 by Thomas Belayneh
By Thomas Belayneh
Retail sales and initial jobless claims were expected to be weak and boy did they deliver.
The median forecast for retail sales was -12% – a wise forecast given the widespread “stay-at-home” orders that have shuttered most high-street businesses across the US. However, Friday’s print -16.4% still packed a punch to even the most pessimistic of forecasters.
To compound the weak headline reading, core retail sales fell a staggering -17.2% despite market expectations for a substantially smaller -8.6%.
The difficulty in forecasting accurately is understandable. These are unprecedented times with no precedence to even guide forecasters in their formidable task. As we begin to see a recovery from the horrific data in March, the question turns to whether this is sustainable and what speed can Uncle Sam bounce back?
To that extent, the initial jobless claims was certainly uninspiring. Expectations for a rise of 2,500,000 in unemployment claims also missed, substantially, with 480,000 more Americans filing than expected.
Thursday’s release takes the total to 36,471,000 (11% of the US population) since 26th March. As many US businesses have already, or are preparing to, re-open, albeit socially distanced, May’s Services and Manufacturing PMIs (due Thursday) will be closely watched by investors to gauge the speed of recovery.
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