US Macro: Weekly data trumps monthly data during the pandemic – The speed at which the COVID-19 pandemic is upending economic activity has meant a similarly rapid change in the kind of data economists are paying the most attention to. Today saw the release of the ISM manufacturing PMI, and on Friday we will get the non-farm payrolls release for March. Both reports would normally be highlights on the data calendar, but despite in normal times providing a relatively live read on the US economy, this month they are unlikely to capture anywhere near the scale of the stoppage in economic activity that we are now witnessing from more timely data metrics. The March ISM manufacturing PMI showed only a marginal decline from February’s reading, to 49.1 from 50.1, likely reflecting that respondents to the survey give their submissions throughout the month. In contrast, a new weekly index of economic activity constructed by the New York Fed showed a dramatic decline in activity for the week ending 21 March – the depth of which is matched only by the week to 28 February 2009, in the middle of the post-GFC Great Recession. This index appears to perform very strongly in predicting industrial production and overall GDP growth (see here). Indeed, the forward-looking new orders index of the ISM is more consistent with this, falling to a post-crisis low of 42.2 (Feb: 49.8), and with the extension of stay-at-home orders for non-essential business workers to 80% of the US population, there is likely to be a further significant decline in both new orders and manufacturing production in the April ISM report.

The same considerations will apply to this Friday’s nonfarm payrolls report, the reference period of which is the week ending 13 March. This is notably before last week’s unprecedented 3.3mn rise in jobless claims, and so we expect a relatively modest 200k fall in payrolls for this release. Much more in focus for economists and markets will therefore be tomorrow’s weekly jobless claims. Here, we are likely to see a similarly dramatic rise in claims as we saw last week, suggesting an unprecedented revision to the numbers when we get the April payrolls report on 8 May.