MARKET WATCH: APRIL 6, 2020

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Last Week’s Economic News

• Reflective of the impact of COVID-19 and efforts to contain it, March saw employment fall by 701,000 jobs. For perspective, the average number of jobs added per month for the 12 months ended in February was 196,000. About two-thirds of the drop occurred in leisure and hospitality, mainly in food services and drinking places. Notable employment declines also occurred in health care and social assistance, professional and business services, retail trade, and construction. The unemployment rate spiked to 4.4%, the largest monthly increase since January 1975. The number of unemployed persons jumped 1.4 million to 7.1 million. The labor force participation rate, at 62.7%, decreased by 0.7 percentage point over the month. The employment-population ratio, at 60.0%, dropped by 1.1 percentage points over the month. The average workweek fell by 0.2 hour to 34.2 hours in March. The decline in the average workweek was most pronounced in leisure and hospitality, where average weekly hours dropped by 1.4 hours. In March, average hourly earnings increased by $0.11 to $28.62. Over the past 12 months, average hourly earnings have increased by 3.1%.

• Not unexpectedly, purchasing managers saw manufacturing decline in March, impacted by COVID-19. In fact, according to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™, these were the worst downturns in output and new orders since the financial crisis of 2009. The overall deterioration in the health of the manufacturing sector was the fastest since August 2009. Emergency measures to tackle the spread of the virus also led to a solid fall in workforce numbers and business confidence, as factories laid off staff and shutdown.

• The Manufacturing ISM® Report On Business® also saw survey respondents describe a downturn in manufacturing due to COVID-19. New orders fell notably, while production, prices, and employment also contracted.

• Purchasing managers in service industries noted a significant drop-off in business activity for March. Also tailing off were new orders, employment, and prices.

• The international trade in goods and services deficit was $39.9 billion in February, down $5.5 billion from January. February exports were $207.5 billion, $0.8 billion less than January exports. February imports were $247.5 billion, $6.3 billion less than January imports. Year to date, the goods and services deficit decreased $19.7 billion, or 18.7%, from the same period in 2019. Exports increased $1.1 billion, or 0.3%. Imports decreased $18.6 billion, or 3.6%.

• According to the Department of Labor, the COVID-19 virus continues to impact the number of initial claims for unemployment insurance. Most claims are coming from services industries, particularly accommodation and food services. However, a significant number of claims involve health care, social assistance, and manufacturing. For the week ended March 28, there were 6,648,000, an increase of 3,341,000 from the previous week’s level, which was revised up by 24,000. This marks the highest level of initial claims in the history of the series. According to the Department of Labor, the advance rate for insured unemployment claims jumped from 1.2% for the week ended March 14 to 2.1% for the week ended March 21. The advance number of those receiving unemployment insurance benefits during the week ended March 21 was 3,029,000, an increase of 1,245,000 from the prior week’s level, which was revised down by 19,000. This is the highest level for insured unemployment since July 6, 2013, when it was 3,079,000.

Eye on the Week Ahead

For economic reports, the focus this week is on inflation. The latest price information is available for March with the Consumer Price Index and the Producer Price Index. Last month consumer prices inched ahead 0.1% and were up 2.3% over the last 12 months. Producers saw their prices drop by 0.6% in February and are looking for a strong rebound in March.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.