Daily Commentary BY THE CURVE TEAM –

Growth Data Dives Lower as Unemployment Rises

Enter date here

In a rich 24 hours for data releases we are beginning to see hard data on the extent of the impact from lockdown measures on both growth and unemployment.

Given the lockdown measures imposed across the world, it was clear that growth and unemployment were set to be hit hard in Q1 and Q2. Overnight the release of growth figures for the Eurozone were released with a q/q fall in Q1 of 3.8%. There are now estimates in the market that a worst case for Q2 could be as low as -15%. Some of the larger European nations and economy posted larger falls with France -5.8% q/q and Italy -4.7% q/q.

Similarly, the US saw an annualise Q1 GDP figure print at -4.8%. However, with measures to contain Covid-19 in the US not applying until late in the quarter and the larges number of cases and deaths from the virus, the real figure will not be seen for some time, until Q2 data is released.

As growth falls, unemployment is rising rapidly. Total new jobless claims in the US has exceeded 30m over the past 6 weeks. Many reports indicate the true figure is significantly higher, with a processing backlog delaying applications. To put that in perspective, 30m people is around one-fifth of the US working age population. In Australian terms that equates to the entire population of greater Sydney out of work. Granted, some if not many of those will be back in work when lockdowns are lifted but there is a likely to be a proportion that are unable to find work.

In the Australian data, number for Jobseeker applicant albeit with a near 1 week lag are currently up and over 1.3m claims. That means on top of the circa 700k Newstart recipients we already had in February, 500k new persons have sort to claim the welfare payment. Given we have the Jobkeeper program as well, unlike the US where a significant amount of the 30m can go straight back to work these 1.3m people may not be able too.

Matthew Dunshea

Client Relationship Manager