US jobs numbers for last month, due on Friday, will undoubtedly reveal the dire unemployment situation caused by the coronavirus crisis, though a surprise from this week's ADP private payrolls numbers could have provided a chink of light.
According to Wednesday's ADP report, US companies cut 2.76mln jobs in May, less than one-third of the number economists had expected, having seen a 20mln drop in April.
In a May jobs data preview before the latest ADP numbers - which he had predicted would see a 9.5mln drop - CMC Markets analyst Michael Hewson said: "April payrolls report confirmed what most of us already knew, that we would see a record number of American’s lose their job. When the final number was released, we came in slightly below expectations at 20.5mln, but nonetheless when the (April) ADP number is also added, it spelt out a sorry tale of economic misery for a huge number of people. Since then the weekly jobless numbers have continued their climb pushing the number up to 40mln people."
He added: "Friday’s May payrolls report is also expected to be a multimillion number and while it won’t be anywhere near the April number, each job loss will be felt equally as painfully, with another 8mln jobs expected to be lost."
"This would take the total number of jobs lost over the last two months to over 50mln and push the unemployment rate up from 14.7% close to an eye wateringly high 20%," Hewson predicted.
Workspace results contain risks
On the corporate front, Workspace Group plc (LON:WKP) will post preliminary results for the year to March 31, 2020, which may come with risks for the landlord, as its real estate investment trust status may take a hit if it does not declare a dividend.
Analysts expect bad news for investors as the office property owner has deferred or reduced rent for its hardest-hit tenants, collecting only half of the rent due at the end of March. Rental enquiries have seen a material slowdown since the lockdown began.
Workspace rents London offices via flexible leases, giving it more exposure to risks during the current coronavirus crisis.
“Despite the disruption, the group thinks profit for the year ended March 31 will be in line with expectations, so it’s the outlook statement that’s most important,” analysts at Hargreaves Lansdown commented in a preview.
“Fortunately the group has considerable headroom on the terms set by its lenders, known as covenants – it can withstand a 61% fall in rental income or 63% fall in asset valuation,” they added.
Significant announcements expected on Friday:
Finals: Workspace Group plc (LON:WKP), Biffa PLC (LON:BIFF)
Economic data: US non-farm payrolls, UK consumer confidence, UK house prices