The weekly average number of US Covid-19 cases surpassed the heights of the spring with 45,400 new cases on Saturday, a new record. Considering the recent increase in cases, Florida, Arizona and Texas slowed down their plans of reopening and easing lockdown measures. In terms of the effective transmission rates (Rt), 33 US states now have Rt values over 1.0. The daily increase in net cases (total cases, less fatalities and less recovered) remains at a 1.4% d-o-d national average. However, the trends in some states are still worrying: California 2.8%, Florida 4.1%, Louisiana 3.7% and Texas 6.9%, all in acceleration compared to 5-days ago. In Europe, Germany saw the daily increase in net cases easing at 0.3%, while Italy is at -2.8%, Spain at 0.4%, France at 0.2% and Switzerland at 2.3%. In emerging economies, with a few exceptions, net cases are tending to increase. So far, the surge in new cases in different parts of the world did not translate into an acceleration in fatalities. At a world level, the daily death rate eased slightly from 1.2% d-o-d (5-day average) to 1.0%. World daily flights continue to be depressed at -61% compared to pre-crisis levels. Only Chinese domestic flights are close to normal (-20%), although the number declined recently.
On Monday, White House Director of Trade and Manufacturing Policy Peter Navarro declared that the US-China trade deal was "over," to later clarify that his remark had referred to the "lack of trust" in the Chinese administration. President Trump later confirmed the trade deal was "fully intact". Additionally, it was reported that China’s imports of US goods through May reached roughly 19% of the total target for 2020 set in the phase 1 trade deal. China purchased 22.1% of targeted manufactured products, 20.8% of targeted agricultural products and 3.1% of targeted energy products.
The euro area Flash Composite PMI rose from 31.9 in May to 47.5 in June with the contraction in manufacturing and services slowing for the second consecutive month. Signs of supply chain disruption remained apparent in June as delivery times continued to normalize at a very slow pace. Markit noted “marked” factory headcount reduction in June as producers scaled-back operating capacity.
Consumer spending in the US rose +8.2% in May, according to the US Commerce Department, the largest monthly increase on record. This followed the largest fall on record in April (-12.6%). At the same time, personal income fell -4.2%, the most since January 2013. This drop followed a record +10.8% increase in April, which coincided with extraordinary fiscal measures to cushion against covid-19 hardship. Last week initial jobless claims came in at +1.48m with weekly ongoing claims for unemployment declining modestly -767k to +19.5m.
The IMF’s World Economic Outlook is projecting global growth at -4.9% in 2020, 1.9 percentage points down from its April 2020 forecast. This was attributed to the more negative impact on activity of the covid-19 pandemic and a more gradual recovery than previously anticipated. For 2021, the IMF projects global growth at +5.4%, compared to the +5.8% projection laid out during the April update.