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On the latest edition of Market Week in Review, Adam Goff, managing director, investment practice, and Sam Templeton, manager, global communications, discussed the August U.S. employment report, recent trends in U.S. equities and emerging markets, and the progression of budget talks in Italy.

The rise in U.S. hourly earnings punctuates strong August jobs report

The U.S. employment report for the month of August released Sept. 7 by the Bureau of Labor Statistics, showed that the economy added 201,000 jobs last month, while the unemployment rate held steady at 3.9%. This was a very strong report, Goff said, adding that the real surprise in the latest numbers was wage inflation. “Average hourly pay rose 2.9%, year-over-year, and 0.4% on a month-to-month basis”, he stated, “an acceleration which, in my view, is certain to grab the attention of the U.S. Federal Reserve (the Fed)”.

Why? In Goff’s mind, many of the reasons the Fed may have had to forgo additional interest-rate increases this year are likely to fall by the wayside in light of August’s strong showing. “Strong wage inflation and strong unemployment makes a September rate hike, in my mind, a done deal”, he said, adding that the latest numbers are also likely to bolster the odds of an increase in December as well.

Regulatory fears, trade war concerns unnerve U.S. markets

Despite the continued strength in the economy, U.S. markets had a choppy ride the week of Sept. 3, especially in comparison to previous months, Goff said. “It’s as if everyone came back from summer break, looked ahead and found several issues to be worried about,” he remarked. The tech sector, in particular, had a rough week, he noted, as testimony from several top tech executives before Congress sparked fears of more regulation within the industry.