Advice & Comments
9 Jun 2025
Hiring slowed slightly in May as businesses and consumers contended with tariff concerns...
In this Edition:
U.S. Job Growth Slows, Economic Sectors Struggle, but Trade Talks Rekindle Hope
Despite slower hiring and weakening manufacturing and services activity, renewed U.S.–China trade talks offer a glimmer of optimism for global markets.
ECB Cuts Rates Again as Eurozone Growth Surprises to the Upside
The European Central Bank cut rates for the eighth time as inflation cools and Eurozone GDP surges, signaling a potential end to its easing cycle.
China’s Manufacturing Slumps Sharply as Tariffs Bite, Stimulus Hopes Rise
China’s factory activity saw its steepest drop in over a year, fueling calls for more stimulus as weak exports weigh on growth despite modest services sector gains.
Global Markets Rally on Easing Economic Fears and Stimulus Hopes
U.S. and European stocks climbed on upbeat jobs data and rate cuts, while Chinese equities rose on stimulus expectations despite Japan’s market dip.
South Africa’s Growth Slows as Structural Challenges Persist, but Markets Find Support
Economic growth lost momentum in Q1 amid sectoral declines and weak manufacturing sentiment, yet local equities and the rand showed resilience on strong resource gains.
JSE Rallies on Resource Surge as Rand Strengthens Modestly
South African stocks rose sharply last week, led by a strong resource sector rally, while the rand firmed slightly against the U.S. dollar.
Market Moves and Chart of the Week
U.S. Job Growth Slows, Economic Sectors Struggle, but Trade Talks Rekindle Hope
Hiring slowed slightly in May as businesses and consumers contended with tariff concerns and a potentially cooling economy. Nonfarm payrolls rose by 139,000, and the unemployment rate held steady at 4.2%. The broader underemployment rate, which includes discouraged workers and those working part-time for economic reasons, was also unchanged at 7.8%. Wages came in stronger than expected, with average hourly earnings up 0.4% over the month and 3.9% year-on-year. Separately, April data showed job openings and hiring picked up, pointing to continued labour market resilience in the face of the Trump administration’s new global tariffs.
U.S. manufacturing contracted for a third consecutive month, with the ISM manufacturing PMI falling to 48.5, the lowest since November and below expectations. The services sector also weakened, slipping into contraction for the first time since June 2024, with a reading of 49.9.
U.S. President Donald Trump and Chinese President Xi Jinping spoke on Thursday in a long-awaited call, agreeing to restart trade talks soon. Chinese media reported that Xi invited Trump to visit China and said Beijing had followed through on a trade deal made in May, though U.S. officials disagree. Xi also called for the removal of U.S. trade restrictions and urged cooperation over Taiwan. Trump described the call as “very good” and noted that progress was made on rare earth materials, with negotiations set to resume soon.
ECB Cuts Rates Again as Eurozone Growth Surprises to the Upside
The European Central Bank cut its main interest rate by 25 basis points to 2.00% on Thursday, marking its eighth reduction since June 2024. President Christine Lagarde said the ECB had “nearly concluded” this policy cycle and that future decisions would depend on incoming data.
Eurozone GDP grew by 0.6% quarter-on-quarter in Q1, double the initial estimate and the fastest pace since Q3 2022. According to Eurostat, the upward revision was led by stronger growth in Ireland and Germany. Inflation eased in May, with headline CPI falling to 1.9% from 2.2% and core inflation moderating to 2.3%, indicating softer underlying price pressures.
China’s Manufacturing Slumps Sharply as Tariffs Bite, Stimulus Hopes Rise
A private survey showed China’s manufacturing sector experienced its sharpest contraction since September 2022, as the Caixin manufacturing PMI dropped to 48.3 in May from 50.4 in April, falling short of expectations. The decline primarily reflects the ongoing impact of U.S. tariffs on smaller exporters, which has dampened external demand. In response, there is growing consensus among analysts and policymakers that Beijing will need to implement additional stimulus measures to bolster domestic consumption and investment. Meanwhile, the Caixin services PMI showed modest growth, rising to 51.1 in May from 50.7 the previous month.
Global Markets Rally on Easing Economic Fears and Stimulus Hopes
Major U.S. stock indexes closed higher for the second week in a row as U.S. jobs data appeared to allay fears of a recession. The Nasdaq Composite led with a 2.18% gain, followed by the S&P 500, which rose 1.50%, and the Dow Jones Industrial Average, up 1.17%, pushing all three into positive territory for the year.
The pan-European STOXX Europe 50 Index rose 1.18% in local currency terms, supported by easing inflation and the European Central Bank’s decision to cut rates. The UK’s FTSE 100 Index also advanced, gaining 0.75%.
In Asia, Japan’s stock markets declined over last week, with the Nikkei 225 Index down 0.59%. In contrast, mainland Chinese markets advanced as weaker-than-expected economic data fuelled expectations of further government stimulus. The Shanghai Composite Index rose 1.06% in local currency terms, while Hong Kong’s Hang Seng Index gained 2.46%.
South Africa’s Growth Slows as Structural Challenges Persist, but Markets Find Support
South Africa’s economy grew by 0.1% in the first quarter of 2025, a slowdown from the 0.4% recorded in Q4 2024, according to Statistics South Africa. Growth was primarily underpinned by a 15.8% surge in the agriculture, forestry, and fishing sector, which added 0.4 percentage points to overall GDP. However, six out of the ten industries contracted over the quarter, with mining and quarrying posting the steepest decline at -4.1%. On the demand side, household consumption growth moderated to 0.4% from 1.1%, reflecting base effects after the boost from two-pot retirement withdrawals in the previous quarter.
South Africa’s manufacturing sentiment weakened further in May, as ongoing logistical bottlenecks continued to weigh on demand, according to the Absa Purchasing Managers’ Index (PMI). The seasonally adjusted PMI fell to 43.1 from 44.7 in April, marking the seventh consecutive month below the neutral 50-point mark, signalling continued deterioration in business conditions. While forward-looking sentiment showed some improvement, Absa noted that underlying demand and activity remain subdued amid persistent structural constraints.
JSE Rallies on Resource Surge as Rand Strengthens Modestly
The JSE All Share Index gained 2.16% over last week, supported by a strong rally in resources (+5.41%), while industrials (+1.42%) and financials (+1.29%) also posted solid gains. The property sector was the only laggard, edging down 0.53%. By Friday's close, the rand had slightly strengthened by 1.19% against the U.S. dollar, trading at R17.78.
Market Moves of the Week
Chart of the Week
May saw 139,000 new jobs added, surpassing expectations, with unemployment steady at 4.2%. Wage growth remained strong, rising 0.4% for the month and 3.9% year-on-year. Health care, leisure and hospitality, and social assistance sectors led the job gains.