Featured # Markets | 2 years ago

Brexit Outlook Being Overshadowed by U.S. Payroll Data

Britain’s surprising vote to secede from the European Union has made investors unsure of what the future holds for the global economy for up to the next few months. Economists as well as central banks, such as the United States Federal Reserve, are observing how the decision is going to impact specific data. In Europe, though, the primary concern is the political battle as Britain’s ruling Conservative Party, also known as the Tories, choose a new leader.

“Our suspicion is that we will not hear anything concrete on the UK’s path towards Brexit for some time now, with the Tory leadership contest raging away,” economists at Investec stated.

The main information in the next week is this probably going to be the United States non-farm payrolls data, which is due on Friday. According to polls, economists predict that there has been significant job growth over the last month. They believe that here has been a growth of more than 180,000 jobs in June. This would be best since there was a weak growth of only 38,000 in May.

“Not only service-industry corporations but also the construction industry should have maintained the momentum in the US labor market,” analysts at DZ Bank reported.

In general, recent indications of stability in United States manufacturing, a low amount of layoffs, as well as positive consumer spending data have indicated that economic growth regained momentum during the second quarter. Even so, one worry in the jobs data is the production of the work force. Although wages have been increasing, that is not to say that productivity has been increasing.

“While stronger wage growth seems set to be a silver lining, this is unlikely to be sustained; low productivity growth may damp higher wage growth,” said Madhur Jha, a senior economist at Standard Chartered.

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