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Jobs, Jobs, Jobs

The U.S. employment report out Thursday is expected to show employers added 2.9 million jobs in June, adding back a fraction of the losses from March and April. But don’t be surprised if the result is wildly different. Economists surveyed by The Wall Street Journal are forecasting a gain of anywhere from 1.9 million to 7.2 million, an unusually wide range that underscores uncertainty about the economy and difficulty measuring its performance during the pandemic. Reminder: Economists had forecast a loss of 8.3 million jobs and a 19.5% unemployment rate in May. The actual result was a gain of 2.5 million jobs and a 13.3% rate.

The unemployment rate is especially open to interpretation. In a new blog post, Bureau of Labor Statistics Commissioner William Beach writes about trouble the agency has had measuring who is unemployed. The root of the problem: recording workers as absent from work—something that usually applies to vacation or sick time—rather than out of a job. The misclassification could have shaved as much as 3.1 percentage points off the unemployment rate in May. Mr. Beach said BLS is taking steps to fix the problem, which is good for the data but makes an unemployment forecast all the more difficult.


The S&P/Case-Shiller home-price index for April is out at 9 a.m. ET.

The Chicago purchasing managers index for June is expected to rise to 45.0 from 32.3 a month earlier. (9:45 a.m. ET)

The Conference Board’s consumer confidence index for June is expected to rise to 91 from 86.6 a month earlier. (10 a.m. ET)

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin testify to a House panel on the government’s pandemic response at 12:30 p.m. ET.

New York Fed President John Williams speaks on central banking in the age of Covid-19 at 11 a.m. ET, Fed governor Lael Brainard speaks about the Dodd-Frank Reform Act at 10 a.m. ET, and Minneapolis Fed President Neel Kashkari and Atlanta Fed President Raphael Bostic participate in a National Association for Business Economics webinar at 2 p.m. ET.

The Bank of Japan releases its tankan survey of business sentiment for the second quarter at 7:50 p.m. ET.

China’s Caixin manufacturing index for June is out at 9:45 p.m. ET.


China’s Growth Picks Up

China’s economic recovery picked up steam in June as exports and services benefited from government support policies and the reopening of some overseas markets. The world’s second-largest economy remains far from a full recovery. However, economists say a series of recent signs of increased economic momentum point to China recording positive growth in the second quarter. That follows a sharp contraction in the first three months of the year. The latest: China’s official manufacturing purchasing managers index climbed to a three-month high in June. A separate nonmanufacturing PMI, a gauge of services and construction activity, jumped to a seven-month high. The readings came in better than economists’ forecasts and suggested a durable and broad-based improvement in China’s economy, Jonathan Cheng reports.

Risks and Rewards

Fed Chairman Jerome Powell is set to tell lawmakers the reopening of the U.S. economy—and the accompanying upturn in spending and hiring this spring—came sooner than central bank officials had expected. But he said the push to lift restrictions on commercial activity carried other risks, evidenced by recent increases in coronavirus infections and hospitalizations in states across the U.S. South and Southwest. Mr. Powell and Treasury Secretary Steven Mnuchin are slated to testify before the House Financial Services Committee as part of quarterly appearances required by the $2 trillion relief package Congress approved in March, Nick Timiraos reports.

“While this bounce back in economic activity is welcome, it also presents new challenges—notably, the need to keep the virus in check.” —Fed Chairman Jerome Powell

One positive sign for the U.S. economy: Pending-home sales posted their biggest monthly increase on record in May. “The housing market is likely benefiting from low mortgage rates, stronger demand for larger spaces as more and more people work from home and a desire to move away from crowded cities to avoid exposure to the coronavirus,” said High Frequency Economics economist Rubeela Farooqi.

But reopenings aren’t going off without a hitch. Las Vegas Strip hospitality workers filed a lawsuit against casino operators, accusing the companies of failing to protect employees from Covid-19, one of the first efforts to hold employers legally responsible for infections as cases in the U.S. surge, Katherine Sayre reports.

AMC Entertainment Holdings, the country’s largest theater chain, is postponing plans to reopen its U.S. locations by about two weeks following date changes for the upcoming releases of two major films, R.T. Watson reports.

South Korea long ago flattened its Covid-19 curve. But the staying power of the virus shows the difficulties with fully tamping down new infections. The country of 52 million people relaxed social-distancing measures seven weeks ago—after several days of no local transmissions—becoming one of the first countries to open back up. Since then, South Korea has contended with a stream of infection clusters, largely around the Seoul metropolitan area. Health officials are now contemplating whether to reinstitute national social-distancing measures, Timothy W. Martin and Dasl Yoon report.

Never Can Say Goodbye

Britain officially left the world’s largest trading bloc in January, but the country remains in the European Union’s customs area and single market until the end of the year. On Monday, British and European Union negotiators will begin stepping up attempts to secure an unusual kind of deal: one putting up new barriers to commerce. Officials on both sides say a deal is possible. But the question now isn’t if the negotiations will result in more bureaucracy or trade friction, but rather how much, Max Colchester and Laurence Norman report.


What do economists think about President Trump’s decision to suspend new immigration on several employment-based visas programs? Well, 98% say even if temporary, the ban for skilled workers will weaken U.S. leadership in science, technology, engineering and mathematics. “The ability to attract talented workers and researchers from abroad is a great strength of the U.S. economy, and should not be squandered,” Yale’s Larry Samuelson said in the IGM Forum poll.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

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