U.S. retail sales are expected to be dismal, but have they reached their bottom?
The government’s monthly report on retail sales is due on Friday, and the results are likely to be ugly.
Economists surveyed by Bloomberg expect the report to show that sales fell 12 percent in April, even more than March’s 8.4 percent drop. That would add up to the worst two-month decline on record.
April could prove to be the bottom. The March figures were helped in part by panic-buying, and stores were generally open for the first half of the month. Most states have begun to lift barriers to commerce and movement, and many economists expect spending to rise in May as people venture out.
But any rebound is likely to be gradual. There is no guarantee that customers will return in numbers previously seen — and even if Americans feel comfortable going out to shop, they may not have as much money to spend, because millions have lost their jobs.
Stock markets in Europe rose on Friday after new Chinese data showed some early but encouraging signs that growth was returning in the wake of the coronavirus.
Major European markets were trading 1 to 2 percent higher after mixed trading in Asia. Oil prices on futures markets were also higher, and futures pointed to an upbeat start on Wall Street.
Still, other market indicators showed continued skepticism. U.S. Treasury bond prices were rising, a sign that traders were seeking safety.
Investors were reacting to Chinese economic data that showed factory activity was picking up, though the data also showed that the country’s shoppers were still reluctant to spend. The numbers were released as President Trump renewed his bellicose language on the U.S.-China economic relationship.
In Germany, the government released data showing that Europe’s largest economy had entered a recession.
In Asia’s stock markets, the Nikkei 225 index in Japan ended the day 0.6 percent higher. Hong Kong’s Hang Seng Index fell 0.1 percent. The Shanghai Composite index in mainland China fell 0.1 percent. South Korea’s Kospi rose 0.1 percent. Australia’s S&P/ASX 200 gained 1.4 percent.
The German economy suffered its worst contraction since the 2008 global financial crisis, shrinking by 2.2 percent in the January-March period from the previous quarter as the shutdown of activity to halt the spread of the coronavirus pummeled growth.
These figures, combined with a revision downward to the economic growth tally for the end of 2019, mean Germany has entered a recession.
The German government, which reported the data on Friday, said the biggest hit came in March and probably worsened in April, when consumer spending, capital investment and exports — a major driver of growth in Germany — fell off a cliff.
“Things will get worse before they get better,” Carsten Brzeski, the chief eurozone economist at ING, said in a note to clients.
While the worst of the pandemic is beginning to ease, with Germany and other countries slowly easing their lockdowns, Germany’s contraction was a reminder that even if the virus dissipates, the economic fallout could pressure the European and global economy for months or years.
The European Commission has projected that European Union economy would shrink by 7.4 percent this year, the worst recession in its history.
Germany and its neighbors are throwing hundreds of billions of euros in fiscal measures to stem the damage, and economists say more stimulus will be needed.
China’s factories maintained a brisk pace last month, but Chinese consumers were slow to resume shopping, according to official statistics released on Friday.
Many countries have been watching China’s economic performance closely because it is several months ahead of the rest of the world in coping with the virus. The Chinese economy shrank in the first three months of this year for the first time since Mao Zedong died in 1976.
Factories caught up on orders that they had struggled to fill earlier this year, when the coronavirus pandemic raced across the country. The country’s industrial production was up 3.9 percent from April of last year, better than most economists expected. Production had been down 1.1 percent in March from a year earlier and had plunged in February, when the virus outbreak was at its worst in China.
But shopping and fixed asset investment stayed weak. Retail sales were down 7.5 percent in April compared to a year earlier, marginally worse than economists’ expectations.
“We should be aware that given the continuous spread of the epidemic abroad, the stability and recovery of the national economy is still faced with multiple challenges,” said Liu Aihua, the director general of the agency’s department of comprehensive statistics.
Strong exports kept factories busy last month. Many factories were catching up on orders placed while Chinese cities were locked down. But orders for further exports have stalled, according to surveys of purchasing managers.
Despite the progress, tens of millions of migrant workers are unemployed. Many white-collar workers have suffered pay cuts. Weak consumption has some economists wondering how long China can sustain an economic rebound.
With movie theaters closed because of the pandemic, many Hollywood producers have delayed the release of potential blockbusters. But on April 10, Universal Pictures made the animated sequel to its 2016 hit “Trolls” available as a digital rental on streaming platforms for $19.95.
A month later, “Trolls World Tour” has brought in more than $100 million, a record for streaming. Universal said that when movie theaters reopened, it planned to release its films simultaneously in theaters and online, eliminating the theaters’ traditional window of exclusivity.
James B. Stewart asks, is this, finally, the death knell for the theater?
If theaters are no longer the only places to watch hot new movies upon release, what is left to attract crowds? Big screens are nice, and there’s the debatable proposition that movies are more fun when watched with a crowd and the aroma of popcorn, but that’s not much of a business model.
But the concept that a theater could be an experience beyond the movie itself that would lure people out of their homes may offer a path forward.
“Movie theaters have always come back, and when they do, they’ve been better,” said Maggie Valentine, author of “The Show Starts on the Sidewalk,” a history of movie theaters. She noted that the movie palaces of the 1920s were a response to the 1918 flu pandemic, and a drab, run-of-the-mill experience wouldn’t do the trick. “They had to give people a reason to leave their homes.”
A labor case headed to France’s highest court is testing Amazon’s ability to sidestep the demands of workers who are fulfilling the surge in orders the pandemic has produced for Amazon’s business.
It is also emblematic of why Amazon, based in Seattle, has battled to keep unions out of the company, especially in the United States, its biggest market, write Liz Alderman and Adam Satariano.
Unions in the United States have made few inroads after years of campaigns. But in Europe, national labor laws require companies to deal with them, even if employees aren’t members. With more than 150,000 deaths in Europe from the coronavirus, the groups are leveraging the crisis to reassert influence and press Amazon harder on workers’ rights.
“The only way to push Amazon to action is through confrontation,” said Jean-François Bérot, who works at an Amazon warehouse south of Paris. “We’re working in conditions that pose a risk to our safety. Workers’ voices must be heard.”
Amazon defended its response to the virus, saying it had put in place more than 150 changes at its warehouses, including providing masks, temperature checks, hand sanitizer, increased time off and higher pay. It expects to have more than $4 billion of coronavirus-related expenses in the current quarter.
“We respect everyone’s right to express themselves, but object to the irresponsible actions of some labor groups who have spread misinformation and made false claims about Amazon during this crisis,” said Stuart Jackson, an Amazon spokesman.
Stocks ended a turbulent day of trading on Thursday with a solid gain, after a rebound fueled in part by a surge in oil prices.
The S&P 500 rose more than 1 percent, after recovering from an early drop of nearly 2 percent.
The early drop was fueled partly by the Labor Department’s latest report on unemployment claims, which showed that millions of workers are still losing their jobs.
But stocks rose out of that slump as oil prices jumped, prompting gains in shares of energy companies like oil services giant Halliburton and Occidental Petroleum. West Texas Intermediate, the U.S. crude benchmark, rose about 9 percent. At more than $27 a barrel, oil is now far above the lows that it plumbed in April.
The gains in oil prices came as the chief of the International Energy Agency said on Thursday that he saw “signs of a gradual rebalancing” in the oil market. Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but it is expected to slowly recover as more countries ease lockdown measures.
Financial stocks also rallied on Thursday, with shares of Wells Fargo up more than 6 percent. and Capital One Financial up more than 9 percent.
It’s been a tumultuous week for stocks, as investors heard a drumbeat of warnings about the pandemic and its long-term impact.
On Tuesday, Dr. Anthony S. Fauci spoke about the serious risk of a new outbreak if the economy was reopened too quickly. On Wednesday, the Federal Reserve chair, Jerome H. Powell, warned of permanent damage to the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
Catch up: Here’s what else is happening.
The New York Stock Exchange will begin to reopen its trading floor the day after Memorial Day, the exchange’s president, Stacey Cunningham, wrote in an op-ed article in The Wall Street Journal. As part of “measured reopening plans,” floor brokers will return in small numbers and be required to wear masks. Social distancing requirements will be in place, and workers and visitors will be screened before entry.
Disney Theatrical Productions said Thursday that its stage adaptation of “Frozen” would not reopen on Broadway once the pandemic eases, making the musical the first to be felled by the current crisis. “We believe that three Disney productions will be one too many titles to run successfully in Broadway’s new landscape,” Thomas Schumacher, the president of Disney Theatrical Productions, said in a letter to his staff.
Reporting was contributed by Ben Casselman, Sapna Maheshwari, Mohammed Hadi, Liz Alderman, James B. Stewart, Adam Satariano, Gregory Schmidt, Carlos Tejada and Daniel Victor.