04 May 2020
The U.K. Markit Services survey indicated a rapid decline in the sector which had hit 34.5 in March. April’s reading fell to 13.4 points due to business closures and a decline in sales for non-essentials. The contraction indicates a deep, broad-based downturn for the second quarter. The Bank Of England maintained its asset repurchasing programme, however, there are indications that a few committee members are in favour of further stimulus. The ECB stimulus programme took a blow this week, as a German court ruling indicated a violation in German constitution in the monetising of debt instruments. However, a spokesperson for the European Commission reiterated that EU law takes precedence. The court ruling could see the Bundesbank pull out of the ECB bond purchasing programme, though the move would not impact the stimulus provided for COVID-19.
The U.S. Non-Manufacturing sector had its first contraction in growth since the end of 2009, breaking 122 months of expansion, with a posting of 41.8 points for April. Business activity unsurprisingly led the decline which hit 26 points; the lowest since the survey began. Given this backdrop, more Americans moved out of the labour market in the last week according to the U.S Department of Labour. As of 2nd May, a further 3.16 million citizens filed unemployment claims. The Non Farm payroll report provided further grim news with a total of 20 million US citizens moving out of the labour market in April. Figures show the worst the employment situation since the Great Depression, with the unemployment rate spiking to 14.7% representing the worst result in almost 60 years.