Statistics Netherlands reported that Dutch retail turnover increased with 8.2% in May 2020 compared to May 2019. Both the food sector and the non-food sector realized a higher turnover than in the same month previous year. Hardware stores realized record sales for the third consecutive month. Supermarkets and specialty stores also recorded strong turnover growth. Clothing and shoe stores again recorded a lower turnover.
Figures from the Chinese government show that activity in Chinese industry increased slightly in June 2020 compared to last month. The purchasing managers index for June amounted to 50.9, compared to 50.6 in May 2020. The services sector also showed more activity than last month; the purchasing managers index rose from 53.6 to 54.4 in June.
The German federal statistics agency Destatis announced that inflation in Germany increased in June 2020. Inflation reached 0.9% this month, compared to 0.6% in May. This brings inflation back to the same level as in April 2020. Based on the European harmonized measurement method, inflation in June was 0.8% on an annual basis.
The 6M Euribor decreased with 1 basis point to -0.28% compared to previous business day. The 10Y Swap increased with 1 basis point to -0.18% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
A report published on Friday on the money growth and lending of the European Central Bank (ECB) shows that in May, companies borrowed € 51 billion from banks in Europe. A substantial volume according to historical standards, but less than the € 121 billion and € 73 billion respectively, which was borrowed in March and April. The annual growth rate of corporate lending in May was 7.3%, the highest rate since early 2009.
Top economist Isabel Schnabel of the European Central Bank (ECB) warns for negative inflation in the eurozone in the coming months. She expects inflation to fluctuate around 0% in the near future and she does not rule out inflation falling below zero as well. Inflation in the eurozone currently stands at 0.1%, more than a percentage point lower than a year ago.
The Agency of the General Treasury of the Ministry of Finance (DSTA) has announced that the Dutch state must borrow more than was expected two months ago. Required funding has increased to € 138.8 billion this year, up € 3 billion compared to the figure the Agency reported in April. At the beginning of this year, before the outbreak of the coronavirus, the Netherlands was expected to borrow 42.7 billion euros in 2020.
The 6M Euribor increased with 1 basis point to -0.27% compared to previous business day. The 10Y Swap decreased with 2 basis points to -0.19% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The economy in the United States grew by 5.0 percent in the first quarter of 2020, compared to the fourth quarter of 2019. This follows from the third estimate published by the US Department of Commerce on Thursday. The contraction of the economy is in line with the second estimate. In the fourth quarter of 2019, the US economy grew by 2.1 percent compared to the third quarter of 2019.
New figures published by the US Department of Labor on Thursday show that 1.48 million Americans filed for social assistance benefits during the week ending June 20, 2020. That is a small decrease compared to a week earlier, when the number of unemployed increased by 1.54 million. Economists had expected 1.35 million new unemployed.
New figures from Statistics France show that the consumer confidence index in France increased to 97 in June 2020, from 93 in May 2020. In April 2020, the consumer confidence index stood at 95. The increase comes as a surprise, as economists expected a consumer confidence index of 92 for June 2020.
The 6M Euribor decreased with 1 basis point to -0.28% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.17% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The United States is considering imposing additional import tariffs of a further USD 3.1 billion on goods from European countries in retribution for ‘illegal’ European state aid to aircraft manufacturer Airbus. This is revealed in a notice from the United States Trade Representative (USTR), an institution acting on behalf of the US president. It concerns products from France, Germany, Spain and the United Kingdom. Last year, the World Trade Organization (WTO) ruled in the Americans’ favour in the dispute with the EU and authorised the imposition of tariffs of USD 7.5 billion on European exports.
The International Monetary Fund (IMF) believes that the global economic damage caused by the corona crisis will total more than USD 12,000 billion in 2020 and 2021. This is what IMF chief economist Gita Gopinath writes in a report on the consequences of what she calls the ‘Great Lockdown’. According to Gopinath, the virus outbreak and global lockdown measures against the virus caused the deepest recession since the Great Depression of the 1930s, with an expected global contraction of 4.9% this year. Next year, the global economy is predicted to recover by 5.4%.
The Dutch economy is contracting even more than the IMF foresaw two months ago, but is recovering more robustly thereafter. According to the organization, the Dutch gross domestic product will decrease by 7.7% this year. In April, the IMF expected a contraction of 7.5%. Next year however, the Dutch economy will grow again by 5%. For 2021, the IMF had previously forecasted a growth of 3%.
The 6M Euribor decreased with 1 basis point to -0.27% compared to previous business day. The 10Y Swap decreased with 2 basis points to -0.16% compared to previous business day.In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
A second estimate published by Statistics Netherlands has shown that the Dutch economy shrank by 1.5% on a quarterly basis in the first quarter of 2020. In previous estimates, Statistics Netherlands reported a contraction of 1.7% on a quarterly basis. Compared to the first estimate, domestic investments in construction, among others, were revised upwards. Household consumption was also higher than initially assumed. The trade balance was adjusted downwards.
Market researcher Markit has reported that activity in the eurozone fell again in June 2020. The purchasing managers index (PMI) for industry came to 46.9. A reading below 50 indicates shrinkage. The PMI for industry did improve sharply in June compared to the previous month; in May it was still at 39.4. The PMI for the services sector amounted to 45.8 in June, up from 32.6 in May.
According to Angela Merkel’s chief economic advisors, the German economy will show signs of recovery from the summer of 2020. Growth expectations for 2021 are also positive. The German government’s advisory council expects a contraction of 6.5% in 2020. For 2021, economic growth is forecast at 4.9%.
The 6M Euribor decreased with 3 basis points to -0.26% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.14% compared to previous business day.
Statistics Netherlands (CBS) released figures on Tuesday showing that consumers spent 17.4 % less in April 2020 than in April 2019. This is the largest contraction in domestic household consumption ever recorded by CBS. Consumers mainly spent less on services, where spending was 24.6 % lower than a year earlier. Circumstances for consumer spending in June are less favourable than they were in April, according to the CBS Household Consumption Radar. Consumer confidence has however recovered slightly in June with a reading of -27 compared to -31 in May 2020.
According to figures released by the European Commission on Tuesday, consumer confidence in the eurozone showed a level of -14.7 in June from -18.8 in May 2020. Consumer confidence across the EU improved from -19.5 in May 2020 to -15.6 this month. Both indicators remained below their long-term averages of -11.1 for the eurozone and -10.5 for the EU.
Figures from IHS Markit and Jibun Bank show that the Manufacturing Purchasing Manager’s Index (PMI) in Japan declined to a level of 37.8 in June 2020 from 38.4 in May 2020. This is the lowest level since March 2009. The Services PMI index increased from 26.5 in May 2020 to 42.3 in June 2020.
The 6M Euribor is unchanged at -0.23% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.16% compared to previous business day.
Christine Lagarde, the president of the European Central Bank (ECB), warned European leaders on Friday that there may be risks to the financial markets if aid packages for economic recovery will not come. The current calm stock market sentiment could change if no agreement is reached, according to Lagarde. The ECB aims to link a recovery fund of EUR 750 billion for the worst-affected Member States to the Multiannual Financial Framework. Moreover, this framework will be increased to EUR 1100 billion, from the current framework (the years 2014 – 2020) of approximately EUR 1000 billion. This makes a total fund of € 1870 billion.
UK retail sales recovered sharply in May, with the first loosening of the corona virus lockdown measures. According to figures from the UK’s national statistics agency, sales increased 12 percent compared to last month. In April, when the severe lockdown was still in place, retail sales declined by more than 18 percent from March.
The British budget deficit is widening as a result of the corona crisis, in particular due to London’s urges to resolve the crisis. For the first time since 1963, public debt exceeds 100 percent of gross domestic product (GDP). Since the beginning of the year, the British state has borrowed £ 103.7 billion, according to the British statistics bureau.
The 6M Euribor decreased with 1 basis point to -0.23% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.15% compared to previous business day.
The Bank of England announced on Thursday that the bond-buying program to limit the economic impact of the corona virus will be increased by 100 billion pounds. This brings the total value of the bond-buying program to 745 billion pounds. Economists had also anticipated an extension of the program. In addition, the Bank of England announced that the benchmark interest rate remains unchanged at 0.1 percent.
The European Central Bank (ECB) reported on Thursday that European banks have so far obtained a record amount of over 1300 billion euros from the European Central Bank (ECB) to fight the economic consequences of the corona virus. In total, 742 banks have now used the loans, the so-called TLTROs. The loans enable banks to borrow money from the ECB for three years, receiving up to 1 percent interest from the central bank in the first year.
New figures from Statistics Germany show that producer prices in Germany decreased by 0.4 percent in May 2020 compared to April 2020. In April 2020, product prices decreased by 0.7 percent compared to March 2020. On an annual basis, the producer prices decreased by 2.2 percent in May 2020 compared to May 2019.
The 6M Euribor decreased with 1 basis point to -0.22% compared to previous business day. The 10Y Swap decreased with 2 basis points to -0.14% compared to previous business day.
Statistics Netherlands has reported that unemployment in the Netherlands rose to 3.6% in May 2020. In April, unemployment was at 3.4%. The increase is lower than expected by analysts. In total, the number of unemployed people in the Netherlands increased by approximately 56,000 from February, when the corona measures were announced. Approximately 75% of this group is below 25 years of age. Unemployment in the Netherlands is now at the same level as in early 2019.
Eurostat has released final inflation rates, showing that inflation in the eurozone fell to 0.1% year-on-year in May 2020. Inflation was still 0.3% in April. The decrease is in line with previous estimates. According to Eurostat, the decrease is mainly caused by lower energy prices. Core inflation, which does not include food and energy prices, stood at 0.9% for the eurozone in May. This was the same as the figure for April.
Figures from the Japanese Ministry of Commerce show that the Japanese economy is suffering severely from the effects of the corona crisis. Japan’s exports fell 28.3% year-on-year in May 2020, the fastest pace since the 2009 financial crisis. Exports of cars and auto parts to the United States, for example, fell sharply. However, exports to China, Japan’s most important trading partner, fell less sharply than in previous months.
The 6M Euribor is unchanged at -0.21% compared to previous business day. The 10Y Swap is unchanged at -0.12% compared to previous business day.
The U.S. Census Bureau reports that retail sales in May show a record 17.7 % increase from April 2020. Economists had expected an 8.4 % increase. In April, retail sales decreased 14.7 % from March 2020. On an annual basis, retail sales were down 6.1 %.
The Netherlands Bureau for Economic Policy Analysis (CPB) published the latest outlook for the Netherlands on Tuesday. In the baseline scenario the economy will shrink by 6.4 % this year and a modest recovery will take place next year with growth of 3.3 %. The new estimates assume a less favourable development than the more optimistic scenarios that were presented in March, according to director Pieter Hasekamp.
The indicator for the economic climate in Germany, according to the ZEW institute, shows further recovery in June. Economists expected a reading of 60 but the index rose to a level of 63.4 from 51 in May. The indicator for the eurozone economy as a whole has also improved, reading at 58.6 from 46 in the previous month.
The 6M Euribor decreased with 1 basis point to -0.21% compared to previous business day. The 10Y Swap increased with 1 basis point to -0.12% compared to previous business day.
The Federal Reserve has announced that bonds of U.S. companies will be eligible for the purchase programme. For this purpose, the U.S. central bank is deploying an emergency lending program with a capacity of USD 250 billion.
The German government wants to raise another EUR 62 billion with the issuance of debt securities to finance the cost of measures to combat the corona crisis, according to press bureau Reuters. However, parliamentary approval is required for the extra issuance. The total issue of debt securities this year would amount to EUR 218 billion. Chancellor Angela Merkel’s cabinet will sign the supplementary budget on Wednesday, before it is submitted to parliament for approval.
Eurozone exports fell sharply in April due to the measures taken in many countries against the spread of the coronavirus. According to the European statistics office Eurostat, exports decreased with 29.3% compared to a year earlier. Exports from eurozone countries to other member states of the European Union were particularly hit.
The 6M Euribor decreased with 2 basis points to -0.20% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.13% compared to previous business day.
A report by KPMG and VU University shows that the Dutch economy can save € 123 billion in the next two years if the Netherlands fights the corona virus more actively. Researchers say that the “maximum control” that the Netherlands maintains has worked well so far. However, if it follows for example the approach of Denmark, Austria or South Korea, it can save much more money in the coming two years. According to the researchers, the current test and source and contact research should be increased. In addition to the economic benefits of a more active approach, they argue that potentially 50,000 fatal corona victims can be prevented.
The president the of European Central Bank Christine Lagarde has informed Italian policymakers that Italy needs to reform the stagnant economy so that it can find its way back up after the outbreak. “My institution, the ECB, will play its part within its mandate. But it’s up to the policymakers to show citizens that our societies are reviving stronger and greener after this transformation, “Lagarde said during a video conference.
Corporates and households in the United States must take into account long-term problems resulting from the corona crisis. That warning can be read in a biennial monetary policy report that the Federal Reserve, the US system of central banks, sent to Congress on Friday. The Fed identifies “persistent vulnerabilities” in companies and households and reports that the path ahead is extremely uncertain.
The 6M Euribor increased with 1 basis point to -0.18% compared to previous business day. The 10Y Swap decreased with 1 basis point to -0.12% compared to previous business day.
Figures from the US Department of Labor show that producer prices in the United States increased by 0.4 percent in May 2020 compared to April 2020. In April 2020, producer prices decreased by 1.3 percent compared to March 2020. Economists had anticipated an unchanged price level. On an annual basis, producer prices decreased by 0.8 percent in May 2020 compared to May 2019.
In addition, the US Department of Labor published figures on Thursday, showing that 1.5 million Americans filed for social assistance benefits during the week ending June 6, 2020. That is a decrease compared to a week earlier, the number of unemployed increased by 1.9 million. Economists had expected 1.6 million new unemployed.
Industrial production in Japan decreased by 9.8 percent in April 2020 compared to March 2020. This follows from revised figures published by the Japanese Ministry of Trade and Industry on Friday. Previously, a decrease of 9.1 percent was reported. On an annual basis, Japanese industrial production decreased by 15.0 percent in April 2020, compared to April 2019.
The 6M Euribor is unchanged at -0.19% compared to previous business day. The 10Y Swap decreased with 7 basis points to -0.11% compared to previous business day.
The Federal Reserve (Fed) expects to keep its key policy rate at the current 0% -0.25% bandwidth for at least 24 months. Fed chairman Jerome Powell said the crisis has not yet hit rock bottom, despite the better-than-expected job report released last week. The Fed expects an economic contraction in the US of 6.5% for 2020. Unemployment is expected to decrease to 9.3% at the end of this year.
The OECD released economic growth forecasts for 2020 yesterday. This shows that the OECD expects the eurozone economy to contract by 9.1% in 2020. The eurozone economy is expected to recover next year, with a growth of 6.5%. OECD economist Laurence Boone argues that the threat of a second corona wave is causing persistent uncertainty and that now is not the time to increase global trade tensions.
French industrial production fell sharply in April 2020, according to the French national statistics agency Insee. Production decreased in April by 18.6% compared to March 2020. In March 2020, a significant decrease was also noted of 16.2%. On an annual basis, industrial production decreased by 34.2% in April. Due to the strict quarantine measures of the French government, the industry was largely shut down in April.
The 6M Euribor increased with 1 basis point to -0.19% compared to previous business day. The 10Y Swap decreased with 2 basis points to -0.04% compared to previous business day.
On Tuesday, Eurostat reported that the eurozone economy contracted in the first quarter of 2020. Gross domestic product (GDP) declined by 3.6 percent in the first quarter of 2020, compared to the fourth quarter of 2019. Compared to the first quarter of 2019, GDP for the eurozone declined by 3.1 percent in the first quarter of this year, the strongest decline reported since the third quarter of 2009.
Statistics Netherlands (CBS) reports that the production of the Dutch industry is 11 percent lower in April 2020 compared to April 2019. The decline is the strongest since 2009. From March to April 2020, production decreased by 8.1 per cent. Of the eight largest business sectors within the industry, the decline in the production of the transport equipment industry was the largest, mainly due to the fact that car factories were closed in April. Production was lower for all business sectors, except for the machinery and pharmaceutical industry, compared to April 2019.
The National Bureau of Statistics in China has announced that the producer prices decreased with 3.7 % in May compared to a decrease of 3.1 % in April. Economists expected a decrease of 3.3 %. The consumer price index rose 2.4 % in May from a year earlier, after a 3.3 % increase in April.
The 6M Euribor is unchanged at -0.20% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.02% compared to previous business day.
The Dutch economy will enter a deep recession this year due to the corona crisis. The Dutch Central Bank (DNB) estimates that gross domestic product (GDP) in the Netherlands will decrease by 6.4% in 2020. This is almost twice as much as during the financial crisis in 2009. As a result, per capita GDP will fall back to its 2015 level in one blow. The Dutch economy is not expected to recover from this blow until 2023.
The corona crisis will probably cost hundreds of thousands of Dutch people their jobs. For this year, DNB is counting on the strongest contraction in employment since the 1970s. According to the central bank, unemployment will probably rise to 4.6% of the labour force in 2020, and because many companies will not reorganise until next year, unemployment is expected to rise further to 7.3% in 2021. This implies that some 700,000 people will soon be out of work, actively looking for work.
Destatis has published figures showing that German exports are severely affected by the corona crisis. Exports fell by 24% in April 2020 compared to March 2020. In March, exports also declined by 12% compared to the previous month. These figures represent the largest export decline since the start of the measurements in 1990. Imports in April decreased by 16.5%.
The 6M Euribor decreased with 2 basis points to -0.20% compared to previous business day. The 10Y Swap decreased with 4 basis points to -0.05% compared to previous business day.
Unemployment in the United States fell unexpectedly to 13.3% in May. Analysts were expecting a further rise to around 20%. The number of new jobs rose by 2.5 million, according to the jobs report published by the US government on Friday. The Bureau of Labor Statistics, which collects the data, states that a large group of people who do not work as a result of the corona crisis is counted as ‘working but absent from work’. Had they been counted as temporarily unemployed, then the unemployment rate would have been 3 percentage points higher.
The Japanese economy has officially entered a recession for the first time in 4.5 years. The third-largest economy in the world recorded a decline of 2.2 percent in the first quarter. In the period October through December, gross domestic product declined by 7.2 percent, due to the effects of amongst others the trade conflict between China and the United States. The figure for the period January to March was adjusted positively because business investment turned out better than expected. An earlier estimate assumed a contraction of 3.4 percent.
China’s exports declined 3.3 percent year-on-year in May, following an unexpected 3.5 percent increase in April. Exports decreased at a lower rate than economists expected, helped by higher foreign sales of medical equipment such as face masks. Chinese imports declined by 16.7 percent, which is even a higher decline than a month earlier. This was partly due to the lower prices of raw materials such as oil and gas and also soybeans. It is the sharpest drop in imports since early 2016. The Chinese trade surplus, reported in dollars, rose to a record level of 62.9 billion dollar.
The 6M Euribor decreased with 1 basis point to -0.18% compared to previous business day. The 10Y Swap increased with 2 basis points to -0.01% compared to previous business day.
The European Central Bank (ECB) announced on Thursday that the Pandemic Emergency Purchase Programme (PEPP), which is used to reduce the economic impact of the corona virus, will be increased by €600 billion to €1,350 billion. Analysts had also anticipated an increase in the bond purchase program in advance. In addition, the ECB decided to leave the other stimulus programs and the main interest rate unchanged.
New figures from Eurostat show that the volume of retail sales in the eurozone decreased by 11.7 percent in April 2020 compared to March 2020. In March 2020, retail sales decreased by 11.1 percent compared to February 2020. On an annual basis, retail sales decreased by 19.6 percent in April 2020 compared to April 2019.
German factory orders decreased by 25.8 percent in April 2020 compared to March 2020. This follows from figures published by Destatis on Friday. In March 2020, factory orders also decreased by 15.0 percent compared to February 2020. For April 2020, economists expected a 19.1 percent decline. On an annual basis, German factory orders were 36.6 percent lower in April 2020 compared to April 2019.
The 6M Euribor increased with 1 basis point to -0.17% compared to previous business day. The 10Y Swap increased with 6 basis points to 0.00% compared to previous business day.
Employment in the US decreased in May by 2.8 million jobs. According to payroll processor ADP, the decrease was much less than a month earlier and also much less than economists expected. On average, economists had anticipated a decrease of 9 million jobs. The April figure was revised to a decline of almost 20 million jobs, from the 20.2 million previously reported. This was the biggest decrease on record measured by ADP.
Unemployment in the eurozone increased in April due to the negative effects of the corona crisis on the economy and labour market. According to European statistics office Eurostat, the unemployment rate reached 7.3% in April, compared to 7.1% in March. According to Eurostat, almost 12 million people were unemployed in the euro area of 19 countries.
Producer prices in the eurozone decreased by 2% in April compared to a month earlier, according to Eurostat. The price decrease is mainly due to the significantly lower energy prices, led by the oil prices. On average, economists expected prices to fall by 1.8%.
The 6M Euribor decreased with 2 basis points to -0.18% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.06% compared to previous business day.
According to the risk report on financial markets published on Tuesday by the Netherlands Bureau for Economic Policy Analysis (CPB) a persisting recession can result in a new euro crisis. Additional government spending and rising debt of corporates, financial institutions and governments would be more difficult to control. Despite the fact that the Dutch banks are more resilient than in 2008, the magnitude of the shock can cause significant financial problems for companies and households and will ultimately have consequences for financial institutions. Initial stress tests on the financial buffers of Dutch SMEs show that these companies will need extra liquidity on top of the existing government support provided in the event of a turnover shock of six months.
New quarterly figures for business services sales report a 2 percent increase in the first quarter of 2020 compared to the same quarter a year earlier, according to Statistics Netherlands (CBS). The reported sales growth is the lowest in years. Most industries generated higher sales in the first quarter despite corona measures coming into effect in March. However, sales for the travel industry in the first quarter were already 19.2 % lower than in 2019. Advertising and the temporary employment sector also showed a lower level of sales compared to the previous year.
The European Central Bank purchased 235 billion euros in total in debt securities until the end of last week. Both Italy and Spain received a relatively high proportion of support from Frankfurt, according to the statistics on the PEPP purchase program. The bank deviated from the so-called capital key, the share that each country has in capital with the ECB.
The 6M Euribor is unchanged at -0.16% compared to previous business day. The 10Y Swap increased with 1 basis point to -0.09% compared to previous business day.
ISM stated that the industrial output in the United States has decreased less in May 2020 compared to April 2020. The Purchasing Managers Index reached a level of 43.1, compared to 41,5 in the previous month. A value of 43.7 was expected by economists. The PMI figure from Markit was 39.8 compared to 36.1 in April. A value of 50 or higher indicates growth.
The Purchasing Managers Index from Markit and Caixin shows that the output of the industry in China has grown slightly in May 2020. The index reached a value of 50.7 in May 2020, compared to 49.4 in April. The official index of the Chinese government noted a value of 50.6, slightly more than the previous month. The index of the Chinese government is focused more on large, state-owned firms, while Markit and Caixin are more focused on smaller, privately owned enterprises. Economists expect that the export from China will slowly pick up again as corona measures are loosed in various countries.
According to United States government figures, construction spending decreased by 2.9% in April compared to March. Economists expected a decrease of 6%. In March, construction spending increased by 0.9%.
The 6M Euribor decreased with 2 basis points to -0.16% compared to previous business day. The 10Y Swap increased with 3 basis points to -0.10% compared to previous business day.