Macro Roundup (May 8)

SHANGHAI, May 8 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead. 

The US dollar fell from two-week highs on Thursday, as investors booked profits before US nonfarm payrolls report for April to be released Friday, which could show massive job losses amid the coronavirus pandemic.

Comments from the Federal Reserve policymakers suggested that the worst is ahead, despite the central bank’s readiness to act, and this also added to the greenback weakness. 

Overnight, LME base metals extended their increase for the most part, with copper rising 1.19% to become the best performer. Aluminium advanced 0.64%, zinc climbed 0.75%, lead grew 0.55%, while nickel lost 0.32% and tin edged lower. 

SHFE nonferrous metals traded in a mixed note last night. Copper gained 0.79%, zinc rose 1.05%, tin went up 0.24%, while aluminium shed 0.52%, lead fell 0.07% and nickel eased 0.77%. 

China’s services activity contracted for the third month in a row in April due to decreasing demand both at home and overseas amid the pandemic, a Caixin-sponsored survey showed Thursday. The Caixin China services purchasing managers' index (PMI) rose to 44.4 last month from 43 in March. A number above 50 indicates an expansion in activity, while a figure below that points to a contraction. 

In February, the reading fell to a record low of 26.5 as the Chinese economy stalled amid the COVID-19 outbreak.

“In April, the severe export shock on China’s economy had a knock-on impact on household income and consumption, as well as business investment,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group Ltd., a subsidiary of Caixin Insight Group.

“As the recovery of domestic consumption was limited and increased infrastructure spending was not enough to offset the plunge in external demand, the country’s economy continued to decline year-on-year.”

The Labor Department said Thursday that US jobless claims totalled 3.2 million in the week ended May 2, compared with estimates of 3 million claims. The figure raised the seven-week total to more than 33 million.

Still, it's the fifth straight week in which new unemployment-insurance claims have fallen, suggesting that the worst of the shock to the labour market has passed. 

China's exports rose unexpectedly by 3.5% in US dollar terms for the month of April as factories restarted production and restaurants reopened following easing coronavirus restrictions. Meanwhile, imports dipped 14.2%, showed customs data on Thursday. These are compared with estimates of a 15.7% drop in exports and a decline of 11.2% in imports. 

The country's trade surplus was enlarged by the growing exports and falling imports. The figure in April stood at 45.34 billion US dollars, compared to forecasts of 6.35 billion US dollars. In March, the number was 19.9 billion US dollars.

"Foreign trade declined at a much slower rate in April, 5.7 percentage points less compared to the first quarter," said Li Kuiwen, director of the statistics and analysis department at the General Administration of Customs. 

"Exports saw its first positive growth this year. The numbers show that China has gradually contained the virus, businesses and production have continuously improved and policies to stabilize foreign trade are starting to take effect."

German industrial production collapsed on month in March due to the coronavirus pandemic, having the largest decline since the beginning of the series in January 1991, federal statistics office Destatis said Thursday.

Total industrial output, comprised of output in manufacturing, energy and construction, fell 9.2% in March from February, in calendar-adjusted terms. This is compared with an estimated drop of 8.8%. 

Key economic data slated for release today include the US nonfarm payrolls and unemployment rate for April, its wholesale inventories for March, and German trade balance for March.