almost 4 years ago • 2 mins
Data out on Tuesday showed activity in the US’s services industry fell to a new record low in April – but some investment banks are betting their bottom dollar that tomorrow, there’ll be sun 🎶
Demand at services companies (i.e. non-manufacturing firms) hit record lows last month according to manager surveys, leading to extensive layoffs and a bleak second quarter for the US economy. As much as 70% of the American economy is made up of consumer spending, after all, and 70% of that comes from the services industry.
Across the Atlantic, a similar survey showed activity in the UK services industry fell last month to its lowest level since records began 🙈 And given that its economy is even more consumer-driven than the States’, it puts the country on track for economic shrinkage this quarter that could eclipse the drop expected in the US.
Rather than wallow in last month’s data, forward-looking investors are more interested in how future months will pan out. Recent reports from Goldman Sachs and Morgan Stanley might’ve come as a nice surprise, then ☀️ Analysts at both banks reckon current data suggests Europe and the US have hit their economic bottoms, and that – after shrinking around 30% this quarter – advanced economies will grow 16% in the third quarter of the year and 13% in the fourth.
If you were trying to time exactly when things will start to get better, analysts might say… well, yesterday 📆 Because with plenty of investors already having bought up stocks during last month’s market rally, you might be too late – especially since those same analysts think coronavirus infection rates could re-accelerate and wipe out the stock market’s recovery. Of course, if not, a return to “normal” – climbing stock prices and all – could be firmly on the horizon…
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