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US jobs report beats forecasts, but wages disappoint - business live US jobs report beats forecasts, but wages disappoint - business live
(35 minutes later)
2.28pm GMT
14:28
Today’s jobs report is a mixed bag, says Paul Ashworth of Capital Economics.
But on balance, he thinks it could tee-up a Federal Reserve rate hike this summer:
Overall, it’s clear that labour market conditions are still strong. The lack of a more marked pick-up in wage growth is the only missing element.
But as far as the Fed is concerned, it is already seeing a clear acceleration in core price inflation, so it can’t delay raising interest rates for much longer. A June rate hike is coming.
2.24pm GMT
14:24
Ian Shepherdson, economist at Pantheon Macroeconomics, has a cunning theory to explain the surprise dip in earnings (from $25.38 per hour to $25.35).
He thinks it’s all in the timing. Workers who are paid every fortnight would have received their second wage payment on 15th February, three days AFTER the Non-Farm Payroll survey took place.
Shepherdson says:
Don’t be taken in by the dip in hourly earnings; it just continues a very consistent pattern of undershooting in months when the 15th – payday for people paid semi-monthly – falls after the employment survey week.
Same thing in March, but then there’ll be a huge rebound, putting year-on-year wage growth at new highs.
This tweet suggests he’s right:
Looked at the calendar effects on hourly earnings changes a few months ago ... Feb. 12 was a Friday this year pic.twitter.com/p17BiIm31P
2.13pm GMT
14:13
Financial commentators agree that today’s Non-Farm Payroll report shows solid job creation, but lacklustre wage growth.
Here’s some reaction:
Headline payrolls number strong. However, the devil continues to be in the details. The quality of jobs added is terrible.
Labor force has grown by 1.52m in the last three months, strongest three-month rise since early 2000.
Your monthly reminder that virtually all the employment gains in the recovery have been full-time. pic.twitter.com/DWQaBjyPUG
US non-farm payrolls rose 242k in February, well above consensus of +190k. However, wage growth slowed to 2.2% (2.5% in Jan)
2.07pm GMT
14:07
Here's where those new jobs were created
Most of the jobs created in America last month were in healthcare, retail, and in bars and restaurants.
Here’s a breakdown
The BLS adds that:
Among the major worker groups, the unemployment rates for adult men (4.5%), adult women (4.5%), teenagers (15.6%), Whites (4.3%), Blacks (8.8%), Asians (3.8%), and Hispanics (5.4%) showed little or no change in February.
1.49pm GMT1.49pm GMT
13:4913:49
More Americans are returning to the jobs market.More Americans are returning to the jobs market.
The labor force participation rate rose to 62.9% from 62.7% in February. That means more people are either in work, or looking.The labor force participation rate rose to 62.9% from 62.7% in February. That means more people are either in work, or looking.
Don't look now, but it's starting to look like Americans are coming back to the labor force. #jobsday pic.twitter.com/KrZzydu7ViDon't look now, but it's starting to look like Americans are coming back to the labor force. #jobsday pic.twitter.com/KrZzydu7Vi
That could explain why wage growth is disappointing -- employers don’t need to offer large pay rises if there is still ‘slack’ in the jobs market.That could explain why wage growth is disappointing -- employers don’t need to offer large pay rises if there is still ‘slack’ in the jobs market.
1.45pm GMT1.45pm GMT
13:4513:45
Alan Krueger, Princeton economics professor, says the fall in earnings last month is a blow.Alan Krueger, Princeton economics professor, says the fall in earnings last month is a blow.
Speaking on Bloomberg TV, he says:Speaking on Bloomberg TV, he says:
I’m surprised that we didn’t see a pickup in wages....This report, behind the headline jobs number, is disappointing.I’m surprised that we didn’t see a pickup in wages....This report, behind the headline jobs number, is disappointing.
1.40pm GMT1.40pm GMT
13:4013:40
Despite a pretty big beat on headline, worth noting that US average hourly earnings fall for first time since 2014!! #NFPDespite a pretty big beat on headline, worth noting that US average hourly earnings fall for first time since 2014!! #NFP
1.39pm GMT1.39pm GMT
13:3913:39
Wage growth disappointsWage growth disappoints
Put the confetti away. Although job creation was strong, wage growth was not.Put the confetti away. Although job creation was strong, wage growth was not.
Average earnings of America’s private workers FELL by 0.1% during February, reversing the 0.5% rise seen in January.Average earnings of America’s private workers FELL by 0.1% during February, reversing the 0.5% rise seen in January.
That means wages are only 2.2% higher than a year ago.That means wages are only 2.2% higher than a year ago.
Today’s report says:Today’s report says:
In February, average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.35, following an increase of 12 cents in January.In February, average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.35, following an increase of 12 cents in January.
Average hourly earnings have risen by 2.2 percent over the year.Average hourly earnings have risen by 2.2 percent over the year.
A big number and bad hourly earnings is not a tightening labor marketnot good in that respectA big number and bad hourly earnings is not a tightening labor marketnot good in that respect
UpdatedUpdated
at 1.40pm GMTat 1.40pm GMT
1.37pm GMT1.37pm GMT
13:3713:37
Job creation was quite broad-based last month.Job creation was quite broad-based last month.
The Bureau for Labour Statistics says:The Bureau for Labour Statistics says:
Employment gains occurred in health care and social assistance, retail trade, food services and drinking places, and private educational services,Employment gains occurred in health care and social assistance, retail trade, food services and drinking places, and private educational services,
Job losses continued in mining.Job losses continued in mining.
1.34pm GMT1.34pm GMT
13:3413:34
The US unemployment rate remains at an eight-year low of 4.9%.The US unemployment rate remains at an eight-year low of 4.9%.
Non-farm payrolls grew 242k last month -- much stronger than expected. Unemployment rate unchanged at 4.9%, as expected.Non-farm payrolls grew 242k last month -- much stronger than expected. Unemployment rate unchanged at 4.9%, as expected.
1.31pm GMT1.31pm GMT
13:3113:31
JOBS REPORT BEATS FORECASTSJOBS REPORT BEATS FORECASTS
Here we go!Here we go!
The US economy created 242,000 new jobs last month -- a better performance than expected.The US economy created 242,000 new jobs last month -- a better performance than expected.
That beats market expectations for 195,00 new jobsThat beats market expectations for 195,00 new jobs
And January’s figure have been revised higher too, to show that 172,000 new hires (up from 151k originally).And January’s figure have been revised higher too, to show that 172,000 new hires (up from 151k originally).
More to follow...More to follow...
1.17pm GMT
13:17
Augustin Eden, research analyst at Accendo Markets, reckons Wall Street will be most interested in the earnings figures:
We expect markets to concentrate on wage growth rather than non-farm payrolls. It is, after all, inflation that’s the key metric for the Fed right now.
1.07pm GMT
13:07
US jobs report: What to watch for
The waiting is nearly over.
In 30 minute time, the latest US jobs report will hit the tape and we’ll know how America’s employment market performed last month.
Here’s what to watch for:
1) How many new jobs were created in February. The consensus is for a 195,000 increase in the Non-Farm Payroll, up from a disappointing 151,000 in January.
As usual, Wall Street estimates vary quite widely, from 165k to 220k.
#NFP HSBC 220kBNP, JP 215kMS 210kBarCap, Citi 200kDB, Exp. 195k Credit Ag 190kCS 185kUBS, WFC, BofAML 175kJefferies 165k
Some observers are more pessimistic though, such:
#NFPGuesses +82k
There’s also a chance that January’s figures will be revised.
2) Where’s the wage growth? We got a surprisingly strong 0.5% pick-up in earnings growth last month, suggesting that the recovery was reaching workers’ pockets
3) Has the unemployment rate come down again? It hit an eight-year low of 4.9% in January, which should have reassured the Federal Reserve over its December rate hike.
4) But what’s the deeper picture? The labor force participation rate has been close to its lowest in decades, showing that many Americans simply stopped looking for work. Underemployment is another key measure; the report will show how many people wanted to work more hours.
Arnaud Masset, analyst at Swiss online bank Swissquote, says the Payroll will shed light on whether America’s economy risks recession this year.
Even the most hawkish Fed members have stopped giving overly optimistic speeches, instead becoming more cautious about the US outlook.
More and more market participants are wondering if the US economy is on the edge of a recession or whether this is just a temporary setback (apparently the temporary setback has become seasonal since last year…). In our opinion, it is still too early to ring alarm bells.”
12.36pm GMT
12:36
Brazilian markets flying for second day as corruption scandal reaches near heart of ruling Workers' Party. Absolutely on fire.
12.27pm GMT
12:27
Brazilian markets leap after Lula detained
Demand for Brazilian assets is surging today, after former president Luiz Inácio Lula da Silva was detained by police.
Lula was dragged into the long-running corruption scandal that has gripped Brazil for months, when federal officers raided his house early this morning.
Our Latin America correspondent Jonathan Watts explains why the move is so important:
The detention of the influential Workers party politician – who is best known by his nickname Lula – marks a dramatic new phase of the Lava Jato (“carwash”) probe into bribery and kickback allegations involving the nation’s leading companies and dozens of congressmen.
It is likely to further add to the pressure on the government of president Dilma Rousseff, who is already struggling with an impeachment challenge, economic recession and the Zika epidemic.
More here: Brazilian police detain former president Lula in corruption inquiry
Investors are piling into Brazilian assets, anticipating political change. Brazil is currently suffering a deep recession, and rampant inflation.
The Brazilian real has already surged by over 2% against the US dollar, from 3.8 against the $1 to 3.7. The stock market is tipped to leap by 6% when trading begins.
Brazil real flying as former Prez Lula's house raided by police. Rumors Dilma will resign as early as this weekend.
CEO's resign and stock prices rise all the time but the BRL performance on the Lula arrest is some sublime price action
Updated
at 12.37pm GMT
11.41am GMT
11:41
Today’s flurry of optimism is also pushing copper to its highest level since mid-November, as Reuters reports:
Copper prices rose to their highest in nearly four months on Friday, boosted by optimism about demand prospects and output cuts that will help the market move towards balance.
Benchmark copper on the London Metal Exchange was up 1% at $4,905 a tonne at 1048 GMT, on course for its largest weekly gain since September last year.
Copper earlier touched $4,933 a tonne, its highest since November 12.
Updated
at 11.52am GMT
11.28am GMT
11:28
Iron ore has hit its highest level since last October this morning, continuing a recent rally.
Iron ore rally continues - price jumped 5% today to $53.75/ton a new 5-month high on @IronOreIndex pic.twitter.com/mTnh5DJs7B
Iron ore is benefitting from reports that China is cutting its steel sector and laying off millions of workers, in an attempt to cut oversupply.
But traders should be cautious, given iron ore demand is so closely linked to China’s economic growth. Trimming supply doesn’t guarantee demand for steel, as the Wall Street Journal warned this week.
11.18am GMT
11:18
Here’s our take on today’s car figures:
Related: UK car registrations highest since 2004
11.09am GMT
11:09
It’s a bleak morning for workers at troubled UK high street chain BHS.
The company’s owners are planning to cut 350 jobs, and is also threatening to close half its stores unless landlords cut the rent.
The job cuts come a day after BHS filed for insolvency protection, as we reported yesterday. My colleague Graham Ruddick has the story:
The retailer intends to make 220 people redundant in stores and 150 people in head office. Another 100 roles that had not been filled in BHS’s head office in recent months will also be scrapped, meaning its central operations will shrink by roughy a third.
BHS bosses briefed staff about the job losses and the turnaround plan on Friday morning.
As well as the job cuts, BHS is threatening to close up to half its stores if landlords do not agree to reduce the rents. BHS has filed a company voluntary arrangement (CVA), a type of insolvency proceeding, in an attempt to cut its costs.
Here’s the full story:
Related: BHS plans to make 350 redundant in head office and shops
10.57am GMT
10:57
Markets up thanks to 'crazy' change in mood
The FTSE 100 is on track to close at a new 2016 high, although the US jobs report could yet change that.
After three hours of trading, the blue chip index is up a steady 0.5% at 6161 points.
Most other European indices are higher too, following Asia’s lead overnight, meaning global markets are still at a two-month high.
Ryan Myerberg, a portfolio manager at Janus Capital, says optimism has come pouring back into the markets recently.
He says (via Reuters):
“We didn’t believe the ‘world is going to end’ story, but the way the mood has changed in the last couple of weeks is just crazy.”
Since the beginning of the year it has been like driving down the motorway where every couple of miles a tractor has overturned, whether that be China, oil, the banks, that you have to swerve around.”
And this tweet shows how some emerging markets have led the rally in 2016, after a couple of challenging years.
#EmergingMarkets rebound, for now https://t.co/3b0FHesQIB pic.twitter.com/geaUOgQxXd
10.30am GMT
10:30
Gold hits 13-month high
Money has been pouring back into gold this morning, driving the price of billion up to a 13-month high.
Gold just hit $1274.50 an ounce, up 1% today, its highest point since February 2015.
It’s surprising to see gold and shares both rallying. But it appears that gold is in demand from investors who are worried about negative interest rates, which have helped drive down the return on many safer assets.
There’s also a theory that Chinese demand for gold could jump if Beijing imposes capital controls, to prevent money leaving the country.
Gold enters first bull market since 2013 https://t.co/4wLibADpDs pic.twitter.com/jdLHYc97xh
Updated
at 10.37am GMT