The recent imposition of tariffs precipitated a market downturn, yet the March Jobs report provided a modicum of solace amidst an otherwise volatile week.
Non-farm payrolls exhibited a robust increase of 228,000, surpassing expectations of 135,000. However, revisions tempered this enthusiasm, subtracting 48,000 jobs from the preceding two months’ gains.
While the labour market appears resilient as we enter the second quarter, it is premature to assess the full impact of recent policy initiatives, including the nuances of immigration policy.
The Pivotal Role of Immigration
The chart below underscores the significant contribution of foreign-born workers to the US economy.
As native population growth has decelerated, the nation has increasingly relied on a burgeoning immigrant population to drive long-term economic expansion.
Although monthly deportations remain commensurate with the Biden administration’s average, this market recap acknowledges that unauthorised border crossings have declined precipitously.
Industries such as construction, professional and business services, and other sectors, including personal care and repair and maintenance, are particularly susceptible to any slowdown in immigration.
Sectoral Disparities
Conversely, sectors less reliant on immigration, such as financial services and information, are also those with the highest wage structures. Other policies, like tariffs, have dampened companies’ hiring and capital expenditure intentions. This market recap believes a deceleration in business spending would likely exert downward pressure on production and, consequently, job growth as we transition into the spring.
Investment Implications
As markets oscillate in response to policy uncertainty, investors would do well to recall that it is about time in the market, not timing the market. This market recap believes in maintaining a diversified portfolio across geographies and asset classes should enable investors to better navigate any forthcoming shocks. By adopting a long-term perspective and eschewing attempts to time the market, investors can mitigate the risks associated with policy uncertainty and capitalize on opportunities as they arise.
