Do Current Market Conditions Support A Boom In Business Recovery?

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It’s an understatement to say that the world economy is in shambles, with most major supply chains still heavily strained by the impact of Covid-19 and many other important sectors failing to recover back to pre-pandemic levels. And while most countries have made some forms of good progress with their vaccination efforts and the easing of strict health and safety protocols, the same can’t be said for less fortunate countries that are still reeling in from the brunt of the damage.

However, recent developments in current market conditions point to a more bullish trend and support the outlook of a more rapid recovery, especially in the business sector. And so, today, we’ll be taking a look at all the notable news and reports that play a significant role in discerning business recovery and what other developments we should be on the lookout for in June.

Recent ISM Manufacturing PMI Paints A Positive Outlook

The ISM Manufacturing PMI is a leading indicator of overall economic health in the markets and dictates the responsiveness of businesses to the changing market conditions. And while the report for May drastically fell short by 4.3 points from the forecast of 65.0 and landing on a meager 60.7, this month’s report revealed a promising 61.2 versus the forecast of 60.8.

Of course, there’s no denying that this report mainly revolves around the manufacturing industry. Still, it does paint a more positive outlook because a rising manufacturing backline also denotes increased production and growing inventories. Therefore, if the manufacturing industry manages to regain its composure during the second half of 2021, we could also see the benefits trickle back into the sleeping business sector.

Last Month’s Retail Sales Were Less Than Desirable

In contrast to the healthy outlook provided by the ISM Manufacturing PMI, last month’s retail sales were less than desirable as consumer spending is still at an all-time low and hasn’t recovered by any significant margin. As a result, last month’s forecast was a modest 1.00%, given that the analysts were already expecting a drawback. Still, the actual report revealed a 0.00%, which proved relatively weak economic activity despite encouraging consumer spending.

However, despite the disappointing retail sales report that worsened confidence for the markets, most investors are expecting more price action in the days to come as more people get vaccinated and inject their money back into the greater economy. Therefore, it might just be that we are currently off to a slow and steady start to overall recovery.

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The Jobs Reset Summit 2021

Last but not least, the World Economic Forum’s Jobs Reset Summit 2021 is currently ongoing, wherein businesses, organizations, and key stakeholders from all across the globe convene together in one virtual meeting to discuss the most pressing issues that affect the world economy today. From keynote speeches about the overview of global economic outlook to talks on a global jobs recovery plan, the summit sets a precedent for how we approach the labor markets in 2021 and beyond.

Likewise, there’s no guarantee of immediate action and implementation. Still, it will undoubtedly set the tone for responsibility and serve as a call to action to all key decision-makers to play their role in economic recovery. As a result, if at least more than half of what’s being discussed comes to fruition following their timetable, the business sector will also flourish in proportion.

What News Should We Be Looking Out For?

Nevertheless, while mulling over the implications of the most recent and relevant reports helps generate a broad understanding of what’s to come next, it’s also important that we keep our eyes forward. Specifically, the most impactful news to come and the ones we should be looking out for are (1)Employment Change and (2)Existing-Home Sales Report.

  • Employment Change And Unemployment Rate: Last month’s employment change and the unemployment rate fell way below the wayside of forecasts. While we’ve managed to make significant progress compared to the initial outbreak of Covid-19, a much faster recovery was expected. Therefore, with non-farm employment change soon to be released on Friday the 4th of June, we will soon discover the situation of job creation and its effect on overall economic health.
  • Existing-Home Sales Report: Last month’s existing-home sales report operated on a paradox, wherein demand was rising, supply was falling, but sales were also dwindling to much lower than expected levels. In fact, despite existing properties, house and land deals, and new housing developments selling like crazy, it seems supply is far off from demand that sales numbers are falling in conjunction. And while real estate is a different market entirely compared to the business sector, it’s an excellent gauge of overall economic health and progress.

Exercise Caution In Today’s Business Markets

Overall, while there are reports that both support the notion of a bullish trend for the business sector and those against it, the news and developments that will unfold in June will reveal the trend of progress. So, we strongly advise against any aggressive business expansion or high-risk investments to avoid putting you in a disadvantageous position if the least desirable circumstances prevail.

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