Intesa Sanpaolo : Both the COVID-induced recession, and the post-COVID recovery, have unusual traits.
Weekly Economic Monitor – Weekly Economic Monitor – 26 June 2020
Intesa Sanpaolo – Research Department
For instance, most of the change in the consumption trend is tied to fluctuations of the propensity to save: specifically, forced savings during the lockdown phase turn into spending during the recovery.
The week’s market movers
In the euro area , the round of June confidence surveys will be completed this week, with the release of the European Commission’s composite index, and the second reading of PMI surveys.
The clear rebound of all the main indicators in June will be confirmed, in the wake of a further easing of social distancing measures compared to the previous month. The recovery trend will need to be confirmed in the months ahead. The flash estimate of consumer prices in June should outline a recovery in monthly terms, driven by energy, with the year-on-year rate little changed compared to last month both in the Eurozone and in the major Member States. Unemployment is expected to increase in Germany, Italy, and in the Eurozone as a whole.
This week’s two topical events in the United States will be the publishing of the minutes of the FOMC meeting, and of the June Employment Report. The minutes should provide indications on potential new accommodative measures, in the form of a strengthening of forward guidance and the possible preparation of some form of curve control. The Employment Report should outline a new, sharp increase in payrolls, forecast at around 4 million, with the unemployment rate dropping to around 12%, accompanied by a potential increase of the participation rate. In the next few months, labour market improvements will become more gradual. New jobless claims should stay on a moderate downtrend. Data releases will also include the manufacturing ISM, expected to move closer to the 50-point mark, and consumer confidence, that should increase further in June. Construction spending is estimated to remain weak in May.
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