The improvement in the weekly unemployment landscape reversed last week with initial jobless claims increasing for the first time since the last week of March. Just over 1.4M people filed for claims last week, up from 1.3M the week before.
Congress and the White House are actively discussing and negotiating what the next round of relief may look like. The House has already passed the ~$3T HEROES Act in May, and the Senate is looking at a smaller relief bill, currently at about $1T. While we are likely to end up somewhere in the middle, the pressure is on as extended unemployment benefits expire at the end of the month, likely putting considerable pressure on the economy.
In preliminary July data, Markit’s survey of the Services and Manufacture sectors increased from June but fell below expectations. Services remained just barely in a contractionary territory (49.6 vs. 51 expected), while Manufacturing moved back into an expansionary territory (51.3 vs. 52 expected). Figures above 50 imply an expansionary environment, while below 50 imply a contractionary environment.
Tensions with China ratcheted up again with the ordered closure of the Chinese consulate in Houston and President Trump said the Phase 1 trade deal means “much less to me now” following the current coronavirus situation.