July nonfarm payroll growth was softer than expected, but strong upward revisions for May and June paint an overall picture of a healthy job market. Accelerating manufacturing employment helped fuel overall payroll growth. Wage growth remains subdued, but wage pressure may be building.
The economy grew 4.1% in the second quarter, topping 4% for the first time since the third quarter of 2014. Consumer spending rebounded strongly and business spending was solid. Growth was strong despite a large contraction in inventories, which should rebound, but net exports were artificially inflated ahead of tariffs.
Last week we had the pleasure of joining just over 3,500 LPL advisors at our Focus 2018 national conference in Boston. We share the most frequently asked questions from Focus 2018, on topics such as trade tensions, emerging markets, growth versus value, and the yield curve.
For a number of reasons, over the past several years it’s been difficult for active managers to outperform equity benchmarks. The tide has started to turn, with central banks pulling back, lower correlations between individual stocks, and an evolving economic environment. We believe active managers may be set up for better relative performance opportunities in the coming years.