The world’s top economy was strong before the Covid-19 outbreak hit, like a natural disaster, causing nationwide business shutdowns. The banking system had been rebuilt stronger since the global financial crisis. Data show more than 30 million jobs were lost in the US, as businesses were shuttered nationwide amid the efforts to stop the spread of the virus.
The data on the UK economy is also showing the full extent of the lockdown with the number of people claiming unemployment benefit soaring to 2.1 million in April. The jump of 856,500 claims in April reflected the impact of the first full month of lockdown, the Office for National Statistics (ONS) has released. However, it’s important to remember that this is what happened and to look forward. With that in mind the information from China is just as interesting.
China was the first to go through this crisis and also the first to emerge and we saw some interesting data released over the last week, as industrial output returned to growth for the first time this year in April. The country continued its gradual recovery after the coronavirus brought activity to a near-halt. Industrial production grew a more-than-expected 3.9% year-on-year last month in a sign that China is recovering from tough lockdown measures now seen in other parts of the world.
The response by governments and central banks has been both swift and significant during the pandemic. On Monday France and Germany proposed a €500 billion fund to finance the recovery of the European Union’s economy from the economic devastation from the coronavirus crisis.
Putting aside past differences and seeking to prove that the Franco-German core of Europe remains intact, President Emmanuel Macron and Chancellor Angela Merkel announced the unprecedented package after talks by video conference. With the European economy facing its biggest challenge since World War II, the French President also acknowledged that the EU had fallen short in its initial response to the virus and needed to coordinate more closely on health.
Looking forward there’s a Bank of Japan meeting and a raft of economic data across the globe to be released over the coming days. This will continue to provide information on the impact that the coronavirus has had on major economies and of course a bank holiday weekend to enjoy.
Chief Investment Officer
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