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| Markets volatile after shock US jobs report - business live | Markets volatile after shock US jobs report - business live |
| (35 minutes later) | |
| 3.39pm BST | |
| 15:39 | |
| Here’s a chart from the Bureau of Labor Statistics showing a breakdown of the US jobs: | |
| 3.28pm BST | |
| 15:28 | |
| Markets are finding it difficult to untangle the details of the latest US data, says Marcus Bullus, trading director of MB Capital. He said: | |
| It has been a tale of two reports, as the markets have struggled to reconcile two conflicting indicators – slowing rates of job creation and stronger levels of wage growth. | |
| The bears have focused on the disappointing headline number, seeing in it a worrying sign of the US economy’s susceptibility to global headwinds. | |
| Yet for the bulls, such concerns are cancelled out by the unexpectedly solid rate of wage rises. Increasing average earnings are often viewed as a reliable barometer of corporate confidence, and the initial rush into fixed income that the report triggered has eased, helping US equities end the week on a more positive note. | |
| With the prospect of the Fed hiking rates in June now firmly off the table, the markets are being reassured that the benign interest rate environment won’t be changing any time soon. | |
| 3.20pm BST | |
| 15:20 | |
| Oil has edged higher ahead of the latest weekly US rig count, with Brent crude 0.8% higher at $45.37. | |
| 3.03pm BST | 3.03pm BST |
| 15:03 | 15:03 |
| Here’s our report on the US jobs numbers: | Here’s our report on the US jobs numbers: |
| Related: US economy adds just 160,000 jobs in April – further sign of a slowdown | Related: US economy adds just 160,000 jobs in April – further sign of a slowdown |
| 2.57pm BST | 2.57pm BST |
| 14:57 | 14:57 |
| More pictures from Greece: | More pictures from Greece: |
| 2.53pm BST | 2.53pm BST |
| 14:53 | 14:53 |
| Away from the US jobs, and ahead of Sunday’s vote in the Greek parliament on pension and tax reforms, prime minister Alexis Tsipras has been defending the measures: | Away from the US jobs, and ahead of Sunday’s vote in the Greek parliament on pension and tax reforms, prime minister Alexis Tsipras has been defending the measures: |
| Tsipras defends pension reforms/tax hikes to Syriza MPs ahead of Sunday's vote#Greece #generalstrike pic.twitter.com/HFxensYOQY | Tsipras defends pension reforms/tax hikes to Syriza MPs ahead of Sunday's vote#Greece #generalstrike pic.twitter.com/HFxensYOQY |
| Tsipras: If we didn't reform [#Greece's] pension system, it would implode quite soon. | Tsipras: If we didn't reform [#Greece's] pension system, it would implode quite soon. |
| Earlier came news that consumer confidence in Greece had fallen to a three and a half year low in April. Not exactly a surprise, given the renewed worries about the bailout programme and the contentious tax and pension reforms. | |
| Updated | |
| at 3.12pm BST | |
| 2.48pm BST | 2.48pm BST |
| 14:48 | 14:48 |
| The jobs data is lukewarm but not unduly concerning, according to analysts at the CEBR: | The jobs data is lukewarm but not unduly concerning, according to analysts at the CEBR: |
| While some will interpret it negatively, April’s job report represents a lukewarm verdict on the US economy’s current performance. The jobs creation numbers are significantly weaker than expected, but the results on pay growth suggest that the labour market has tightened somewhat. Clearly the pace of hiring has slowed, but this does not necessarily mean a marked cooling of growth in the US, as the details behind the headline number show a more nuanced picture. | While some will interpret it negatively, April’s job report represents a lukewarm verdict on the US economy’s current performance. The jobs creation numbers are significantly weaker than expected, but the results on pay growth suggest that the labour market has tightened somewhat. Clearly the pace of hiring has slowed, but this does not necessarily mean a marked cooling of growth in the US, as the details behind the headline number show a more nuanced picture. |
| An economic downturn is typically followed by a long spell of rapid hiring as unemployment or spare capacity in the labour market disappears, a process that is now largely complete. The healthy gains recorded in weekly earnings attest to a market in which workers are beginning to have the upper hand. The participation rate, the unemployment rate, and the number of involuntary unemployed (which all measure spare capacity) have, following sustained improvements during the recovery, changed little since the year’s beginning. In summary, the labour market appears to have stabilised for the time being.... | An economic downturn is typically followed by a long spell of rapid hiring as unemployment or spare capacity in the labour market disappears, a process that is now largely complete. The healthy gains recorded in weekly earnings attest to a market in which workers are beginning to have the upper hand. The participation rate, the unemployment rate, and the number of involuntary unemployed (which all measure spare capacity) have, following sustained improvements during the recovery, changed little since the year’s beginning. In summary, the labour market appears to have stabilised for the time being.... |
| Current indicators show that the services sector expanded in April thanks to a rise in new orders growth. Today’s report demonstrates that the weakness largely pertains to sectors other than services: mining employment fell by 7,000; that in construction and manufacturing showed little change. The sectors making gains were professional and business services, healthcare and financial activities. While a broader sectoral mix would be welcome, this month’s performance shows high-skill services expanding ahead of low-skill occupations such as retail, which made no gains. Consumer confidence, while sagging somewhat at present, should recover assuming wages continue to creep up. | Current indicators show that the services sector expanded in April thanks to a rise in new orders growth. Today’s report demonstrates that the weakness largely pertains to sectors other than services: mining employment fell by 7,000; that in construction and manufacturing showed little change. The sectors making gains were professional and business services, healthcare and financial activities. While a broader sectoral mix would be welcome, this month’s performance shows high-skill services expanding ahead of low-skill occupations such as retail, which made no gains. Consumer confidence, while sagging somewhat at present, should recover assuming wages continue to creep up. |
| There is now little chance of an interest rate hike in June. As it would have been premature in any case, Cebr welcomes this. | There is now little chance of an interest rate hike in June. As it would have been premature in any case, Cebr welcomes this. |
| 2.44pm BST | 2.44pm BST |
| 14:44 | 14:44 |
| Wall Street opens sharply lower but quickly recovers | |
| The US market has unsurprisingly got off to a downbeat start after the worse than expected non-farm payroll numbers. But more surprisingly, it is already off its worst levels, and this is helping to revive European markets. | The US market has unsurprisingly got off to a downbeat start after the worse than expected non-farm payroll numbers. But more surprisingly, it is already off its worst levels, and this is helping to revive European markets. |
| The data was well below forecast, adding to the recent reports from around the globe suggesting the world economy is slowing down. But at the same time it seems to have pushed out the expectations for the timing of the next US rate rise, which is providing some support for shares. | The data was well below forecast, adding to the recent reports from around the globe suggesting the world economy is slowing down. But at the same time it seems to have pushed out the expectations for the timing of the next US rate rise, which is providing some support for shares. |
| So the Dow Jones Industrial Average is now virtually flat having initially fallen around 61 points. | So the Dow Jones Industrial Average is now virtually flat having initially fallen around 61 points. |
| The FTSE 100 is now down just 14 points while Germany’s Dax is down 31 points and France’s Cac 48 points, all well off their lows. | The FTSE 100 is now down just 14 points while Germany’s Dax is down 31 points and France’s Cac 48 points, all well off their lows. |
| Updated | |
| at 3.06pm BST | |
| 2.37pm BST | 2.37pm BST |
| 14:37 | 14:37 |
| Barclays is now expecting just one more US rate rise this year, rather than two, in the wake of the weak jobs data. It is forecasting three rises in 2017. | Barclays is now expecting just one more US rate rise this year, rather than two, in the wake of the weak jobs data. It is forecasting three rises in 2017. |
| 2.33pm BST | 2.33pm BST |
| 14:33 | 14:33 |
| Here are a couple of charts showing the jobs data: | Here are a couple of charts showing the jobs data: |
| 2.30pm BST | 2.30pm BST |
| 14:30 | 14:30 |
| More reaction to the worse than expected US jobs figures. | More reaction to the worse than expected US jobs figures. |
| We could be in for a tricky few months, said David Morrison of Spread.co: | We could be in for a tricky few months, said David Morrison of Spread.co: |
| European equities and US stock index futures were already softer ahead of the release but fell further in the immediate aftermath - while the dollar also lost ground. | European equities and US stock index futures were already softer ahead of the release but fell further in the immediate aftermath - while the dollar also lost ground. |
| Of course, it’s worth remembering that we’ll have another set of updates on payrolls, manufacturing and services, plus a GDP revision, before the Federal Open Markets Committee meets next month. So we could have a tricky few weeks ahead of us which will be even trickier if Fed members sound off about keeping an open mind on a June hike. | Of course, it’s worth remembering that we’ll have another set of updates on payrolls, manufacturing and services, plus a GDP revision, before the Federal Open Markets Committee meets next month. So we could have a tricky few weeks ahead of us which will be even trickier if Fed members sound off about keeping an open mind on a June hike. |
| Dennis de Jong, managing director of UFX.com, believes a June hike is unlikely now: | Dennis de Jong, managing director of UFX.com, believes a June hike is unlikely now: |
| The labour market has been a shining beacon compared with other elements of the US economy for the past few months, but no longer. More than 200,000 jobs had been added in five of the previous six months, but today’s figure has come in disappointingly low. | The labour market has been a shining beacon compared with other elements of the US economy for the past few months, but no longer. More than 200,000 jobs had been added in five of the previous six months, but today’s figure has come in disappointingly low. |
| An interest rate hike next month is now looking unlikely as the general economic waters are far from calm. Weak growth at home and overseas is a major concern, as is poor manufacturing output, so Janet Yellen and the Fed are expected to keep the interest rate pause button pressed for a little longer. | An interest rate hike next month is now looking unlikely as the general economic waters are far from calm. Weak growth at home and overseas is a major concern, as is poor manufacturing output, so Janet Yellen and the Fed are expected to keep the interest rate pause button pressed for a little longer. |
| Slowdown in #US #NFP job growth likely not a one off but a new trend - demand is weak & profits are tanking - #Fed on hold in coming months | Slowdown in #US #NFP job growth likely not a one off but a new trend - demand is weak & profits are tanking - #Fed on hold in coming months |
| For the 19th time, JOBS are a LAGGING indicator so they are now finally playing catch up behind the rest of macro dynamics #forex | For the 19th time, JOBS are a LAGGING indicator so they are now finally playing catch up behind the rest of macro dynamics #forex |
| 200,000 monthly job gains "are simply unsustainable in an economy with a potential economic growth rate of less than 2%" - Capital Economics | 200,000 monthly job gains "are simply unsustainable in an economy with a potential economic growth rate of less than 2%" - Capital Economics |
| 2.24pm BST | 2.24pm BST |
| 14:24 | 14:24 |
| James Smith, economist at ING, says the payrolls report is unlikely to change many minds on the Fed’s rate setting committee about the appropriate timing of the next rise: | James Smith, economist at ING, says the payrolls report is unlikely to change many minds on the Fed’s rate setting committee about the appropriate timing of the next rise: |
| Although clearly disappointing, this may be more consistent with a gradual slowdown in employment growth as the economy gradually erodes the remaining slack in the labour market. | Although clearly disappointing, this may be more consistent with a gradual slowdown in employment growth as the economy gradually erodes the remaining slack in the labour market. |
| As an aggregate, the labour report was probably best described as a fairly neutral and crucially, is unlikely to change too many minds on the FOMC about the timing of the next rate hike. | As an aggregate, the labour report was probably best described as a fairly neutral and crucially, is unlikely to change too many minds on the FOMC about the timing of the next rate hike. |
| That said, if we were to start seeing a more rapid, sustained downtrend in employment growth over the next few months, this may provide evidence that weakness emanating from the business investment side of the economy, which tends to lead the economic cycle, is starting to filter through to the more lagging labour market – at the moment though, it is hard for either the Fed or ourselves to make any conclusions based on one month’s data. | That said, if we were to start seeing a more rapid, sustained downtrend in employment growth over the next few months, this may provide evidence that weakness emanating from the business investment side of the economy, which tends to lead the economic cycle, is starting to filter through to the more lagging labour market – at the moment though, it is hard for either the Fed or ourselves to make any conclusions based on one month’s data. |
| 2.19pm BST | 2.19pm BST |
| 14:19 | 14:19 |
| Back in the UK, Thomas Cook has responded to the threat of a half-term walkout by its cabin crew over plans to reduce break times. | Back in the UK, Thomas Cook has responded to the threat of a half-term walkout by its cabin crew over plans to reduce break times. |
| A spokesperson said: | A spokesperson said: |
| We would like to reassure our customers that nothing matters more to us than safety. It’s regrettable the union has chosen this path because the crew rest procedure, which includes monitoring all crew rest on all flights, was introduced with the agreement of the union. | We would like to reassure our customers that nothing matters more to us than safety. It’s regrettable the union has chosen this path because the crew rest procedure, which includes monitoring all crew rest on all flights, was introduced with the agreement of the union. |
| It also meets the regulations of industry experts the Civil Aviation Authority and does not compromise on safety. We have offered to meet union representatives and the message we hear directly from our crew is that they’re looking forward to a great summer of flying customers on holiday. | It also meets the regulations of industry experts the Civil Aviation Authority and does not compromise on safety. We have offered to meet union representatives and the message we hear directly from our crew is that they’re looking forward to a great summer of flying customers on holiday. |
| 2.13pm BST | 2.13pm BST |
| 14:13 | 14:13 |
| The 160,000 non-farm US jobs created in April was way below the average of 232,000 over the last 12 months. | The 160,000 non-farm US jobs created in April was way below the average of 232,000 over the last 12 months. |
| Professional and business services created 65,000 jobs in April, higher than the 12-month average. | Professional and business services created 65,000 jobs in April, higher than the 12-month average. |
| At the other end of the scale, jobs in the mining sector fell by 7,000. | At the other end of the scale, jobs in the mining sector fell by 7,000. |
| Not everyone was surprised by the non-farm payrolls number apparently: | Not everyone was surprised by the non-farm payrolls number apparently: |
| US Non-farm payroll gain exactly in line with Markit PMI signal at 160K. Q1 ave revised down to 200k v Markit 198k https://t.co/HuToiMgahA | US Non-farm payroll gain exactly in line with Markit PMI signal at 160K. Q1 ave revised down to 200k v Markit 198k https://t.co/HuToiMgahA |
| 2.03pm BST | 2.03pm BST |
| 14:03 | 14:03 |
| Attention will now turn to the Federal Reserve, casting doubt over the central bank’s willingness to raise interests in the face of a softer jobs market. | Attention will now turn to the Federal Reserve, casting doubt over the central bank’s willingness to raise interests in the face of a softer jobs market. |
| Details of the report from the US Labor Department showed a mixed picture for April. The headline figure of 160,000 was undoubtedly a shocker (202,000 expected), but other elements of the report were in line with expectations. | Details of the report from the US Labor Department showed a mixed picture for April. The headline figure of 160,000 was undoubtedly a shocker (202,000 expected), but other elements of the report were in line with expectations. |
| The unemployment rate was unchanged at 5%, as expected, and average earnings grew by 0.3%, also as expected. | The unemployment rate was unchanged at 5%, as expected, and average earnings grew by 0.3%, also as expected. |