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A busy week ahead awaits. Firstly, US unemployment claims data is released, showing how deep the pandemic’s ongoing impact on the US labour market really is. US retail sales are released too, following disappointing holiday results. We also have FOMC meeting minutes, while PMI data from around the world is released too. 

Will US unemployment claims grow again? 

The pandemic continues to put employment on a shaky footing. US unemployment claims are reported in the week ahead, and if previous releases are any indicators, the outlook will be a little muddled. 

Claims for the first week of February 2021 had not been reported at the time of writing, but we can get some indicators of what to expect from unemployment claims report for week ending January 30th.  

Department of Labour stats from that time revealed 779,000 claims were made, against 830,000. That was another dip below 900,000, the number of claims seen in consecutive months at the end of 2020, with overall unemployment rate sitting at 6.3% as of February 5th. 

However, some 17.5 million Americans are still claiming some form of unemployment benefit. 7.2m are on Pandemic Unemployment Assistance, which offers jobless insurance to gig workers and others who do not qualify for regular state benefits. 

Nonfarm payrolls, i.e. the number of new jobs added to the US economy, continue to stall, suggesting any employment growth is still a long way off coming. 

Joblessness won’t be good for the economy. Less money in workers hands points towards less spending power, which means retail sales are likely to drop (see below for more detail), and less money will be swirling around the US economy as a whole, potentially stunting growth. 

Biden’s $1.9 trillion stimulus package contains numerous provisions to help small businesses pay and keep their workers. Will it be enough? It seems like its on the fast track to pass through the House, but its full effects won’t be seen in the short term, or until cash actually enters business’ hands. 

US retail sales – another bad showing? 

We get to see the ongoing impact Covid-19 has on the US’ retail sector this week with a fresh batch of retail sales data released. 

December’s receipts were down 0.7%, according to Commerce Department figures, as reported by Bloomberg, which throws a dampener on MasterCard’s findings that Thanksgiving/Christmas sales actually beat expectations.  

Traditionally, the Holidays are the busiest shopping seasons for US consumers. Throw in Black Friday and Cyber Monday in the same period, then online sales should at least have shown solid performance.  

Amazon in its latest earnings call reported Cyber Monday 2020 was its best ever shopping day, with sales on that 24-hour period clocking in at $9.2bn. Prime Day sales also broke expectation, accruing $10.4bn in sales. 

So, if Amazon enjoyed a bumper period, why are retail sales down across the board? Lockdown, of course, is playing havoc on physical stores, but job losses are likely lowering the overall buying power of the US public. Essentially, retail will probably keep taking body blows as long as the pandemic continues to rage. 

Bloomberg reports it was losses at department stores, restaurants, and other non-Amazon online outlets causing the drop off.  

Will stimulus help? Part of President Biden’s latest round of stimulus are $1,400 individual cheques, which may lend Americans to spend a bit more on non-essentials. 

But we won’t know how things really sit until January’s numbers are reported next Wednesday. 

FOMC releases latest meeting minutes  

The Federal Open Markets Committee met for the first time in 2021 a couple of weeks ago, and the meeting notes are released for public consumption in the week ahead. 

We know from reports that much hasn’t changed from its December meeting: a long-term bullish outlook, driven by vaccines and stimulus, but short-term risk. While stimulus and vaccines are very much driving hopes for the future, in the present, issues around vaccine delivery, plus the erosion of the labour market, mean the Fed is likely to take its foot off the gas when it comes to major shifts in monetary policy. 

Inflation as been discussed, amidst committee discussion on tapering bond purchases, but there seems no indicator that rates will be rising any time soon – even if unemployment drops to numbers that would conventionally start price alarm bells ringing. 

Janet Yellen is one of the new faces joining the FOMC, taking up the role of Treasury Secretary. Neil Wilson, our Chief Markets Analyst, sees scope for a more cohesive fiscal-monetary structural dynamic at work with Yellen’s appointment. Is a shift towards Modern Monetary Theory on its way? 

PMIs – what’s the outlook? 

PMI data in the UK, US and Europe is released next week too, giving some more economic health indicators for these key geographies.  

For Europe, it’s not particularly good. IHS Markit’s PMI fell from December’s 49.1 points to 47.5 points in January, peeling away from the 50 points that indicate ongoing growth. Could a double dip recession be on its way? The difference in the EU’s chief economies, Germany and France, shows differing signals. German industry, for instance, with rising exports, is helping keep Germany on a slim growth trajectory, but France can’t say the same. 

Despite this, it’s not all rosy. January’s IHS Markit final manufacturing PMIs fell to 54.8 in January from December’s 55.2, although that was a touch above the initial 54.7 “flash” estimate. 

“Euro zone manufacturing output continued to expand at a solid pace at the start of 2021, though growth has weakened to the lowest since the recovery began as new lockdown measures and supply shortages pose further challenges to producers across the region,” said Chris Williamson, IHS Markit Chief Business Economist, told Reuters. 

In the UK, the flash PMI index fell to 40.6 in January, showing the lowest reading in eight months. This is far well below the 45.5 level forecast by economists polled by Reuters and the third consecutive reading below 50. Despite vaccine rollout being one of the best in the world, the UK remains in tight lockdown, dealing with changing virus strains, and it appears this is still having a major impact on not just the nation’s physical health, but its economic health too. 

January’s manufacturing PMIs sees output surging in the US. Flash US manufacturing PMI accelerated to 59.1 in the first half January, the highest since May 2007, from 57.1 in December. Economists had previously forecast the index slipping to 56.5 in early January. Can the trend continue? 

Key economic data 

Date Time (GMT) Currency Event 
Wed Feb 17 7.00am GBP CPI y/y 
 1.30pm USD Core Retail Sales m/m 
 1.30pm USD Retail Sales m/m 
 1.30pm USD Core PPI m/m 
 1.30pm USD PPI m/m 
 7.00pm USD FOMC Meeting Minutes 
Thu Feb 18 1.30pm USD Unemployment claims 
 3.30pm USD Natural Gas Inventories 
 4.00pm USD Crude Oil Inventories 
Fri Feb 19 7.00am GBP Retail Sales m/m 
 8.15am EUR French Flash Services PMI 
 8.15am EUR French Flash Manufacturing PMI 
 8.30am EUR German Flash Manufacturing PMI 
 8.30am EUR German Flash Services PMI 
 9.00am EUR Flash Manufacturing PMI 
 9.00am EUR Flash Services PMI 
 9.30am GBP Flash Manufacturing PMI 
 9.30am GBP Flash Services PMI 
 1.30pm CAD Core Retail Sales m/m 
 1.30pm CAD Retail Sales m/m 
 2.45pm USD Flash Manufacturing PMI 
 2.45pm USD Flash Services PMI 


Earnings data 

Data Company Event 
Mon 15 Feb BHP Billiton Q2 2021 Earnings 
 Michelin Q4 2020 Earnings 
 Liberty Global Q4 2020 Earnings 
Tue 16 Feb CVS Health Q4 2020 Earnings 
 Palantir  Q4 2020 Earnings 
 AIG Q4 2020 Earnings 
 Yandex Q4 2020 Earnings 
 Bridgestone Q4 2020 Earnings 
 Poste Italiane Q4 2020 Earnings 
Wed 17 Feb Shopify Q4 2020 Earnings 
 Rio Tinto Q4 2020 Earnings 
 BAT Q4 2020 Earnings 
 Novatek Q4 2020 Earnings 
 Hilton Q4 2020 Earnings 
 Schindler Q4 2020 Earnings 
 Garmin Q4 2020 Earnings 
Thu 18 Feb Walmart Q4 2021 Earnings 
 Airbus Q4 2020 Earnings 
 Daimler  Q4 2020 Earnings 
 Barrick Gold Q4 2020 Earnings 
 EDF Q4 2020 Earnings 
 Carrefour Q4 2020 Earnings 
Fri 19 Feb Hermés Q4 2020 Earnings 
 Danone Q4 2020 Earnings 
 RBS Q4 2020 Earnings 
 Renault Q4 2020 Earnings 



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