The first Monday of September represents the Labor Day in the US. Dating back to 1894, Labour Day commemorates the struggles and achievements of the labour movement including the fight for fair working conditions. For many, it also marks the unofficial end of summer.
The Labor Day festivities didn’t last long, as by Tuesday it was reported that US manufacturing had contracted for the sixth consecutive month in August. The ISM Manufacturing PMI rose slightly from July’s figure of 48.0 to 48.7 but still fell short of market expectations of 49. A reading below 50 signals contraction in the sector. Manufacturers described current economic conditions as “worse than the Great Recession” of 2008–09, due to the instability caused by President Trump’s tariff policies. His “Made in the USA” initiative has been poorly conducted, as plans to relocate production domestically would require companies to justify significantly higher costs.
Staying with the US, Non-Farm Payrolls jobs data was released today, with the data showing only 22,000 jobs had been created, against an expectation of 75,000. This data is further evidence of a cooling labour market and will increase the probability of imminent rate cuts from the US Fed, with a cut later in September now almost guaranteed. It will be interesting to see how data evolves over the rest of 2025, with the impact of tariffs beginning to flow through the economy. On the back of the data, we saw a big fall in the US 10-year yield, which is now approaching 4%, while the US Dollar weakened considerably. The moves in the bond and currency market show more interest rate cuts are now expected.
Inflation in the Eurozone edged up slightly in August, rising from the European Central Bank’s (ECB) achieved target of 2% in June and July to 2.1%. The ECB has stormed ahead of other central banks in the rate-cutting cycle, having reduced rates eight times over the past 12 months. The ECB will meet again next week to discuss policy, and while it is widely expected they will continue to pause, markets remain optimistic that a further rate cut could be on the cards before year-end.
UK retail sales were released this Friday morning, rising by a positive 0.6% over the month of July. It may feel like a distant memory given this week’s poor weather, but sunny conditions and England’s Women’s Euros football success contributed positively to sales. Clothing and online purchases also provided a boost.
It seems neither the US nor the UK can effectively calculate economic data, as June’s strong figure of 0.9% growth for the UK was revised down to 0.3%—a much softer look.
A worrying trend that continues in the UK is the rise in cyber-attacks affecting businesses. This year alone, we’ve seen attacks disrupt operations at Harrods, the Co-op, and most recently Marks & Spencer. Just this week, automaker Jaguar Land Rover was hit by an attack that forced a shutdown of all IT systems, impacting both car sales and production. The timing is particularly unfortunate for the firm, as September marks a pivotal sales period with the release of new registration plates and the delivery of new vehicles to customers.
Gold has been a source of outperformance over the past 12 months, underpinned by the drive towards safe-haven assets amidst trade and geopolitical uncertainties, as well as broad US dollar weakness. Gold is up 2.5% for the week, surging to another all-time high above $3,540.
We’ve previously highlighted our bullish stance on silver, which has now broken through the $40 per ounce mark—a level not seen since September 2011. Silver mining companies have seen extremely strong share price performance over the last month, with earnings rising rapidly.
With mixed economic data out of the world’s biggest economy, we continue to believe it is important to be diversified at a country level, particularly when factoring in near-record high equity valuations in the US.
Nathan Amaning, Investment Analyst
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