As summer is slowly drawing to an end, it has been a relatively quiet start to the week. With the US markets closed on Monday to celebrate Labour Day, it seemed somewhat fitting that the federal pandemic unemployment benefits programme of $300 per week ended, seeing approximately 7.5 million people impacted.
However, with many of these individuals still technically employed, the scheme coming to an end sees them returning to work, thus adding some much needed clarity to the employment data as the year closes out. And, whilst unemployment will likely remain elevated from the pre-pandemic levels, labour shortages in many of the service and retail driven sectors are looking likely to dampen any impact of COVID on the labour market.
We now look towards Thursday when we will see Christine Lagarde, President of the European Central Bank (ECB), speak at the press conference following this month’s ECB policy meeting. With the market expecting the ECB to announce an outline of policy tapering, what we can be sure of is that any subtext will remain data dependent and accommodative, leaving room for flexibility.
This comes in the wake of yesterday’s Eurozone GDP (gross domestic product) showing that the region’s growth significantly beat expectations coming in at 14.3% year on year, and whilst this is a huge boon for markets, with this data still relatively murky we expect Lagarde’s speech to be one of continual support.
Elsewhere we saw UK construction PMI, a measure of activity in the construction industry, come in at 55.2. Whilst this was slightly below expectation, it was still significantly into expansionary territory showing that the UK economy is slowly coming back online. We also saw Chinese trade data significantly beat expectations, allaying any concerns that the pandemic is stalling an economic reopening.
Jonathan Wiseman – Fund Manager