Strong job market and manufacturing activity suggest solid economic growth, even as consumers feel discouraged.
Taking a closer look…
- Manufacturing had another strong month, beating expectations. New orders and strong demand fueled this expansion. The services sector also showed signs of strength last month, with growth across 17 out of 18 industries, including retail, restaurants, hospitality, education, and health care. Real estate was the only outlier, likely due to consumer concerns around interest rates and inflation.1
- Consumer confidence hit a record low in May. Consumers noted that rising gas prices and a higher cost of living have cut into their personal finances. This has been particularly prominent among lower-income consumers and illustrates a potential disconnect between a growing US economy and consumers’ day-to-day experiences.2
- The job market showed signs of improvement:
- Job openings reached their highest level in nearly 2 years.3
- The number of people filing for unemployment benefits came in above expectations, reaching 225,000 claims last week, but was still low relative to history.4
- The unemployment rate held steady at 4.3% in May and the US economy created more jobs than forecasted.5
- The economy appears to be on solid footing. Rising energy prices and uncertainty from geopolitical events may leave investors concerned about the outlook for the stock market. However, higher energy prices have had a limited effect on US and global economic growth. Corporate profits have been strong, and a solid economic backdrop may continue to support both stock and bond markets.
Institutional Portfolio Manager, Strategic Advisers
"Uncertainty around energy prices is clearly weighing on consumers. However, when it comes to the stock market, corporate profit growth has been exceptionally high, and profits are expected to grow further into 2027. Historically, rising corporate profits have supported rising markets, even as consumer sentiment has risen or fallen."
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For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.