The United States labor market still shows signs of great resilience, with unemployment at an all-time low of 4.2%. Next week brings with it the observance of Labour Day in both Canada and the United States. It too has started, bolter in the financial markets. Analysts already expect a return to higher volatility in the upcoming weeks as attention moves to non-farm payrolls and we continue to get mixed economic signals.
As August draws to a close, the U.S. economy stands at an important crossroads. The fallout from the recent jobs report continues as we saw a seemingly dramatic payroll miss, coupled with huge downward revisions to the previous numbers from May and June. While this is good news, it is not guaranteed that the current path of job growth can continue. There’s been a lot of focus by observers about the pace of job creation under the Trump administration and its impact on future monthly reports.
Even more buzz has surrounded the conclusion of the second quarter earnings season. Nvidia’s just-released quarterly earnings report cemented this new milestone, with about 98% of S&P 500 companies now having reported their financial results. Historically, September has not favored the S&P 500, often resulting in poor performance as investors adjust their portfolios in response to changing economic signals.
In overseas markets the Asian sessions have shown a mixed bag. The Nikkei 225 index had an overall very volatile day, closing down 1.24% on the day, while the Hang Seng index rose by 2.15%. These ups and downs mirror larger global market uncertainties that have been in flux due to mixed economic signals, such as Chinese manufacturing data.
The latest Chinese Purchasing Managers’ Index (PMI) report confirms that the manufacturing sector is recovering step by step. Indeed, it just achieved its highest reading in five months! This opens up exciting new possibilities for those international and domestic investors seeking stable investments in the midst of volatility elsewhere.
In commodity markets, gold and silver prices have rocketed in advance expectation of coming U.S. jobs data. Silver, especially, experienced a stunning jump, soaring to a 14-year high within the first few hours of trading. According to analysts, increasing fears over the health of the U.S. economy might send gold to all-time highs. Some analysts are even calling for prices above $3,500 an ounce.
Adding to the uncertainty, market forecasts expect more weak job data this week. As for investors, they’ll be keeping one eye on the ball. In particular they are tracking how the President’s moves to limit immigration would further shift labor market dynamics. These steps likely had an outsize impact on producing the recent jobs data and provide a positive signal to future employment trends.