Unemployment

UK unemployment claims rise

Unemployment claims increased

UK unemployment data released at 07:00 BST Tuesday, 19th May 2020 reported a big rise in benefit claims. The benefit claimant count in April 2020 increased by 856,500 to 2.1 million, according to data released from the the Office for National Statistics (ONS).

As UK unemployment claims jumped, and wages fell – the unemployment rate actually fell to 3.9% almost certainly as a result of the furlough scheme holding employees jobs.

This is in marked contrast to the U.S., where there is no furlough scheme. Unemployment in the U.S. reached some 39 million as of last week over an eight week period – that’s 20% of the workforce.

Universal credit claims in the UK hit record levels during lockdown.

Furlough

One very real concern is that the furlough scheme may simply delay the inevitable when companies finally re-open, and at a potentially huge cost. For markets, this could mean experiencing a bigger rise in unemployment and therefore a delayed hit to the economy even as cases of coronavirus fade.

Before coronavirus lock down began, employment had reached a record high in the UK and in the U.S. too.

Other news

Europe is further supporting the appetite for risk with Germany and France forging ahead with an agreement having jointly agreed to request a €500 billion European Union fund which would likely come in the form of grants.

With Germany now involved it should drive reluctant countries to agree. It will be funded by the European Commission borrowing money – ‘coronabonds’ in all but name. This is an important breakthrough for the European Union, or at least it should be. 

EU flag
European Union

But these measures will ultimately create more debt – who, when and how will this debt be re-paid?

News update

German economic expectations rose sharply in May, increasing for the second month in a row, the ZEW economic research institute said Tuesday.

Easyjet is reported to have been the subject of a ‘highly sophisticated cyber-attack’, thought to have affected 9 million customers.

Trump threatened to completely pull the financial plug on the WHO. Not a good time right now to argue and create enemies.

Walmart sees ‘huge demand increase’ as coronavirus prompts consumer buying both online and in-store.

China – U.S. trade tensions could easily become a major risk to global markets – it’s tenuous to say the least as tensions simmer. A trade war is the last thing the world needs right now.

Market moving events to watch – Wednesday

China – overnight Wednesday – interest rate decision due

UK – retail and consumer price index data due Wednesday at: 07:00 BST

EU – retail and consumer price index data due Wednesday at: 10:00 BST

Stock Market
PMI Data

Market moving events to watch – Thursday

Japan – import and export data due Thursday

Germany – manufacturing PMI data due Thursday

EU – PMI data due Thursday

UK – services and manufacturing PMI data due Thursday

Initial U.S. jobless claim data due for release Thursday at: 13:30 BST – market mover, one to watch!

U.S. – service and manufacturing PMI data due Thursday at: 14:30 – 15:00 BST

U.S. – Fed’s chair Powell speech Thursday due at: 19:30 BST – market mover, one to watch!

Latest update

U.S. stocks pulled back in final trading hours yesterday as a report surfaced apparently casting some doubt over the Moderna Inc. vaccine study. The previous days trading witnessed a climb in stocks riding the euphoria wave created by positive news surrounding Moderna Inc. and its vaccine trials.

Jittery markets – the slightest whiff of good or bad news will move markets (it doesn’t matter which, or even if the news story true or not).

I can’t say as I don’t know for sure, but the information I read about Moderna Inc. looked positive, and positive news will easily move markets up right now. However, U.S. markets and futures pulled back a day after making substantial gains. Good or bad news will push the markets around. Investors will latch on to good news.

Inflation rate falls for April in UK.

Rolls Royce to cut 9000 jobs.

Marks & Spencer profit drops, no dividend to be paid.

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