3 Things You Need to Know This Week | US Jobs Data, Trade Data, Eurozone Economy (June 2, 2025)

Transcript

Paige Tyson:

Hello and welcome to 3 Things You Need to Know this Week, our regular series designed to help you sift through the noise across financial media and understand what really matters for markets. Now, here's three things you need to know this week.

First up, US jobs data.

This week, we'll get a variety of labor market data, including April's Job Openings and Labor Turnover Survey, also known as the "J.O.L.T.S." report, along with May layoff data, and the latest nonfarm payrolls and unemployment figures. Now, last month, we did see slower nonfarm payroll growth compared to March, but it was still better than expectations. And the unemployment rate has remained steady the past few months, with forecast expecting May unemployment to remain at 4.2%. So, while job growth in the US has slowed compared to 2021 or 2022 levels, this does look to us more like a return to pre-pandemic trends rather than a red flag for the economy.

Now, some headlines have focused on the Trump administration's efforts to reduce the federal workforce, but we think investors should focus on the bigger picture here. Layoffs are, of course, tough for those directly impacted. But we don't see the broader economic effects of federal job cuts as being significant enough to materially affect the US economy. Now, whether the latest job numbers exceed expectations or fall short, it's important to remember that labor data reflects what has already happened and doesn't predict stock prices. Economic growth drives job growth—not the other way around. So, our advice to investors is to look beyond that noise and avoid drawing forward-looking conclusions based on backward-looking data.

Next up. trade data.

On Thursday, the US and Canada released trade balance data for April. Now, this could give us an early look at how tariffs are affecting the US trade deficit. There's been a lot of concern that declining economic activity and global trade are inevitable because of all of this tariff uncertainty. But it's important to keep in mind that the trade data for April will mostly reflect orders placed in previous months. Plus, some of the numbers could be skewed by businesses rushing to produce goods in advance to avoid new tariffs. Now, a common misconception is that trade deficits are bad for the economy. It's draining jobs and dollars from the US. But in reality, when the US imports more than exports, it doesn't mean money is leaving the country.

Our trade partners often invest some of that money here in the US. And the trade deficit doesn't affect the US federal debt, either. In fact, the US trade deficit acts as a kind of investment surplus, which contributes to long-term growth and job creation. So, when it comes to trade, we think it's the total trade that matters most for every country. With a trade deficit, there's another one with a surplus— and the more trade, the more global economic activity. And that's a good thing for everyone. So, what should investors take away from this upcoming data? Despite rising trade barriers, global trade levels remained close to the record highs at the end of 2024. Tariffs seem to be more about redirecting trade rather than reducing it.

Finally, the eurozone economy.

This week, we're set to get key eurozone economic data, with investors waiting to see if the region is showing signs of economic resilience or weakness. On Tuesday, the eurozone will release its first estimate of May consumer inflation, and then on Friday, we'll see both April retail sales data and the eurozone's third estimate of Q1 GDP. Now, inflation in the eurozone has been cooling, with recent data showing inflation at just 2.2% year-over-year in March and April. And meanwhile, retail sales have bounced around month-over-month since last October, but it's been positive year-over-year. And overall, broader economic growth in the eurozone has been more resilient than many have expected.

For example, Q1 GDP grew faster than expected. Southern Europe is a bright spot here, with countries like Spain and Italy seeing stronger growth. And even Germany and France managed mild economic expansions in Q1. Now, that said, not everyone is feeling optimistic. Sentiment in Germany is still fairly pessimistic, with many believing big fiscal stimulus is necessary to boost growth. But we don't think so. Germany's real GDP has slipped in the past two years, but areas like consumer spending are helping offset weaker industrial activity. And while some parts of the eurozone are lagging, the rest of the eurozone is holding up quite well— particularly nations in southern Europe, as mentioned.

So, we see the eurozone's stronger-than-expected growth in Q1 as a great example of how the global economy has areas of both weakness and strength. And overall, the balance looks more positive than many realize, which we see as bullish for stocks. And that's it for this episode of 3 Things you Need to Know this Week. For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit fisherinvestments.com. Thanks for tuning in and don't forget to like and subscribe!