More jobs: Good for the economy, a boon for stocks

Employment and wages aren't usually main market indicators, but perhaps they should be.

Bryan Borzykowski 31 August, 2016 | 5:00PM

It was another big month for U.S. employment gains in July, with 255,000 jobs added. That comes on the heels of June's massive gains, when 292,000 jobs were added. In addition, wage growth has grown about 2.6% year over year. By comparison, Canada lost 31,000 jobs in July, and the unemployment rate increased by 0.1 percentage point to 6.9%, Statistics Canada reported.

More people working and making more money usually means more spending, and that helps GDP growth. Both job and wage growth can be boons to stock markets, too. Employment and wages are not usually main market indicators for investors, but perhaps they should be.

"If you were going to draw up a list of indicators of future market returns, (these) wouldn’t be high on your list," says Ed Keon, a portfolio manager with Quantitative Management Associates (QMA), a unit of Prudential Financial Inc. "But we've paid a fair amount of attention to it and with good effect."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Apple Inc313.05 USD-2.26
Hanesbrands Inc14.49 USD-1.56
Norwegian Cruise Line Holdings Ltd46.97 USD-3.17
Skyworks Solutions Inc114.63 USD-2.44
Williams-Sonoma Inc73.67 USD-0.63

About Author

Bryan Borzykowski

Bryan Borzykowski  Bryan Borzykowski is a Toronto-based business and investments writer. He’s contributed to the New York Times, CNBC, BBC Capital, CNNMoney and several other publications. Bryan’s also written three personal finance books and appears regularly on CTV News.