Find clues in the next job report

Hot shots

• Long-term unemployed as the percentage of total unemployed is four percentage points higher than pre-pandemic, a potential omen of things to come.
• Commercial tensions exert pressure on manufacturers, which increases delivery times and paid prices, according to the latest ISM survey.
• The stable labor market provides the necessary support for an economy full of uncertainty, but be careful with the first signs of weakness, such as the increase in long -term unemployed.
• For now, we hope that the economy will grow, especially in the last part of the year. The growth engine will probably provide an insatiable demand for artificial intelligence, energy generation plants and other capital investments
• Wait for market volatility to continue. We have seen that markets are especially sensitive to news holders, and we don’t expect it to change much in the short term.

Commercial tensions place cracks in delivery times

In the manufacturing sector, it reported an increase in delivery times in May, reminiscent of the interruptions of the supply chain of recent years. This time, it is not a pandemic, but commercial uncertainty. Investors will receive an awkward reminder that politics has consequences. Many industries are recovering from the cervical whip. Those in the transport team industry regretted the fact that constantly change commercial policy has created chaos about the ability of suppliers to react and remain profitable. Companies in machinery and primary metal sectors reported difficulty determining prices in recent weeks, and lack of clarity will probably continue, creating confusion for the profit perspective.

The delays in the entry and objection ports on who should support the tariff load has increased delivery times above the levels of 2019. An encouraging observation is that supplier deliveries are no more slow than 2018 levels during Trump 1.0 commercial policies.

A stable labor market will support consumer spending

The true disposable in April increased 0.7% for a month, the fastest rate since January 2024, indicating that the stable labor market provides the necessary support for an economy full of uncertainty.

However, investors must take into account the number of long -term unemployed as an omen to come. The proportion of long -term unemployed to total unemployed has increased for three consecutive months, increasing to 23.5%. For the context, the relationship was 19.2% in February 2020.

On Friday, the Office of Labor Statistics will publish the report, and we hope that payrolls would grow last month, but not as much as consensus is expected. Commercial uncertainty greatly affects small businesses, the engine of creating employment for the economy of the United States, and this last report could be the first to show the impacts of volatile commercial policy.

Expenditure growth is above the annual income growth

Despite the rebound in monthly income data, long -term income growth is not strong enough to support spending in the coming months. Growth has exceeded income growth for several months, and investors should not be surprised if consumer spending takes a breath in the short term. However, the broader economic growth could be sustained by the demand for artificial intelligence, energy generation plants and other capital expenses.

The expense will slowerly make income up to date

Source: LPL Research, Office of Economic Analysis 03/06/25

Summary

We expect another encouraging inflation report for May, but then we could expect a reacture in consumer prices at the end of this summer. If the labor market is maintained, we still hope that the economy will grow in 2025, although at a slower pace than in recent years.

With regard to capital markets, we hope that volatility will continue. After the recent bouncing of the stock market, the Strategic and Tactical Assets Assignment Committee (STAAC) does not rule out the possibility of a lower investment amid the continuous uncertainty around tariffs.

During periods of political uncertainty, LPL’s investigation prefers to deviate little from its reference points. In that spirit, the committee recently improved the actions of the emerging market (EM) to Neutral, leaving regional preferences in the United States, international developed and EM aligned with reference points. Among the sectors, the Committee favors only communication and finance services.

Within the fixed income, STAAC has a neutral weight in the central bonds, with a slight preference for the values ​​supported by mortgages (MBS) on the investment grade companies. The Committee believes that the reward of risks for the central bond sectors (US Treasury, MBS agency, investment grade corporations) is more attractive than the more sectors. The Committee does not believe that adding duration (sensitivity to the interest rate) at current levels is attractive and remains neutral in relation to the reference points. The Committee would be more interested in adding long -term bonds if the 10 -year Treasury performance. UU. It was approaching 5%.

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Important disseminations

This material is only for general information and does not intend to provide specific advice or recommendations for any individual. There is no guarantee that the opinions or strategies discussed are appropriate for all investors. To determine which investments (s) can be appropriate for you, consult your financial professional before investing.