Largest contraction in employment in the US since march 2009
Figures published by the US Bureau of Labor Statistics confirmed that 701 thousand jobs were lost in the US economy during the month of March, number way above the analyst consensus estimate (-100 thousand e.). This took the unemployment rate to 4.4%, a level not seen since 2017 and the highest monthly rise since January 1975; this as a consequence of COVID-19`s impacts and the efforts to contain it. It is the worst report on employment since March 2009, and according to a released statement, these number don`t consider layoffs due to business or school closures in the last two weeks of March (when jobless claims increased in almost 10 million), which is why April`s figures could reflect a more negative impact on the labor market. The largest loss of jobs occurred in the entertainment and hospitality sectors (-459 thousand), but important drops were seen in social care and health services (-61 thousand), professional and business services (-52 thousand), retail sales (-46 thousand) and construction (-29 thousand). Meanwhile, salaries accelerated slightly to 3.1% annually during March, even though it`s expected to see a deceleration as time moves forward. These figures put an end to the longest expansion cycle in the history of the United States and raises concerns of the virus`s negative impacts on the economy.
OPEC+ will have an emergency meeting on Monday
After President Donald Trump had telephone conversations with the president of Russia and the Saudi prince to reach an agreement in order to carry out cuts that would stabilize oil prices, the OPEC+ announced it will have an emergency meeting to negotiate agreements as soon as Monday. According to recent reports, all crude oil producers will be invited to the meeting, even if they aren`t part of the organization. Trump will meet with main oil companies in Texas today to request they take part in cuts, while the Russian oil sector has showed intentions of negotiating with Saudi`s once again. There is a talk of the possibility of a 10 million barrels per day cut to be agreed on but this would barely be enough, with markets estimating COVID-19 will reduce the demand of crude oil in 35 million barrels per day, equivalent to the total production of Russia, Saudi Arabia and the US combined.
Mexico prepares an economic response plan in light of COVID-19
Through meetings with the business sector and the Ministry of Finance and Public Credit, a package has started to be prepared in order to respond to the negative economic consequences brought by COVID-19. Recent reports suggest the government will present an economic recovery program on Sunday, whose objective is to protect employment and guarantee liquidity in businesses and homes. It`s expected the government could resort to public trusts to obtain resources necessary to execute the plan and not turn to a further increase in debt. Additionally, leaders in the private sector met with the President in the National Palace yesterday and agreed on measures to be taken in the next three months, which include a fund supported by Nafin to protect small and medium-sized businesses, for the purpose of banks to grant them credit; after it was estimated up to 1 million 170 thousand businesses would remain closed during the contingency and could cost up to 4% of national GDP. The government opposed providing businesses with tax facilities in April, but will “little by little” evaluate the possibility of doing this in the following months, leaving avoiding unemployment in the short run in hands of businesses. The haste with which the health emergency must be responded has raised doubts concerning the government`s strategy, even though the measures announced on Sunday will be important to consider. Lastly, the Mexican central bank has requested to act with agility in light of the crisis, without losing sight the need to maintain sustainability regarding public finances, low inflation, and a solvent financial sector.