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US economy created 227,000 new jobs in January, as jobless rate rises to 4.8% - live updates US economy created 227,000 new jobs in January, as jobless rate rises to 4.8% - live updates
(35 minutes later)
2.15pm GMT
14:15
The mixed picture from the non-farm figures - positive jobs numbers, weaker than expected wages growth - also saw some volatility in the currency markets as traders tried to work out the implications for US interest rates. Kathleen Brooks, research director at City Index, said:
The dollar initially reacted positively, however, within minutes the dollar index backed off highs as the foreign exchange market took stock of some of the weaker elements of the report. US stock market futures moved higher and are predicting a stronger open for the Dow, S&P and Nasdaq. However, the bond market was less impressed, and US treasury yields fell across the curve, the two-year yield is currently down 5 basis points, which could weigh on the buck further on Friday.
We don’t think that today’s non-farm payrolls report, on its own, will be a game changer for the Fed, and the market is still pricing in the prospect of another rate hike from the Fed by mid-year; after all wage growth at 2.5% is still above the Fed’s target inflation rate. However, we will be watching the development of wages, which are a key metric for the Federal Reserve going forward. If they don’t pick up again for February then Federal Reserve rate hike expectations may start to get pushed further out to the second half of 2017, which could limit dollar upside in the medium term.
2.14pm GMT
14:14
The yield, or interest rate, on US government bonds has fallen since the jobs report came out.
Traders are betting that the weak wage growth last month means the Fed is even less likely to raise interest rates in March.
Expectations for March Fed hike drop to 12%, from 20%.(via @pattidomm) @CNBC
Free headline: Trump Trade Trounced pic.twitter.com/4ykYwBJXsz
2.09pm GMT
14:09
US jobs report: What the experts say
Wall Street and City economists broadly agree that today’s US jobs report shows America’s economy remains robust, although the mediocre wage growth is a disappointment.
Andrew Hunter of Capital Economics:
The 227,000 rise in non-farm payrolls in January suggests that the labour market started the year on a reasonably solid footing. However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June.
Kully Samra, Charles Schwab U.K. Managing Director:
“Today’s jobs numbers coupled with most other economic data points this week demonstrate the ongoing resilience and strength of the US economy.
The figures also corroborate the findings of the Atlanta Fed Wage Growth Tracker, which has generally continued on an upward trend over the last quarter. This is a further indicator of both momentum in the wider domestic economy and that a tighter job market is boosting job security and overall pay.
“Weekly jobless claims remain near a multi-decade low and appear healthy enough to keep the low unemployment rate intact. A strong job market, inflection points in the wider economic data and corporate earnings, alongside increased consumer and business confidence, should be a cause for optimism amongst investors in US equities.”
Naeem Aslam of Think Markets:
The US NFP data has confirmed that the lavish party in the employment sector is still somewhat solid, especially if you look at the headline number. You can say that it was a super solid number because it was well ahead of expectations. This week we had a number disappointing news with respect to what traders were expecting, for instance, the Bank of England’s event.
It is not all good news when it comes to the US jobs number because if you peel the layers, it shows that the downside surprise is in the wage report and a lot of disappointment there. We still need to see more readings before we can see that there is a trend because this number is full with noise.
There is no doubt that the hourly wage growth has gathered the most momentum recently and fuelled this concern among traders that the Fed is behind the curve, while inflation is picking up steam. Clearly, today’s number has put cold water on that. Moreover, if you are interested in a rate hike, then clearly you need to know that the Fed cannot move until they have a clear idea what the fiscal spending will be and that is the reality which market needs to digest.
Justin Wolfers of University of Michigan.
Bottom line: Jobs numbers confirm the US economy is still motoring along nicely at a good clip—fast enough to keep pushing unemployment down
The big question remains how much slack remains in the labor market, and how many folks we can pull back into the labor force.
Tanweer Akram of Thrivent
Continued improvement in the labor market in the U.S. strengthens the case of the Fed remaining on course to gradually tighten monetary policy in the coming months. Even though last month’s job growth was strong, the FOMC will be cautious in tightening monetary policy because of considerable uncertainty about economic policy and global conditions.
A key challenge for the new administration will be to lift growth in both workers’ compensation and labor productivity. Infrastructure spending, lower taxes, business friendly attitude, and more streamlined regulations would be beneficial to the economy. However, higher tariffs, restrictive immigration policies, protectionism, lack of action on global climate change, and various erratic policies would be harmful.
Richard de Meo, Managing Director of Foenix Partners.
Today’s Non Farms print was as strong as last month’s was disappointing, yet the reflex dollar rally was quickly given back as traders cast their eyes through the detail of an underwhelming overall jobs report.
Seasonal challenges relating to January data should be taken into account, yet the fall in average earnings to 0.1% and a rise in the unemployment rate to 4.8% might cause a slight stir across the FOMC, who just this week expressed their comfort with the labour sector. A binary assessment of upcoming Fed decisions would point to a minimal but negative impact to rate expectations, yet the stronger message to emerge is that US businesses confidence is on the rise and, in the process, already helping Trump towards his 4% GDP target.
2.06pm GMT
14:06
I’ve grabbed some nice charts off Bloomberg TV, showing how today’s jobs report compared to Wall Street’s forecasts....
...and also showing how wage growth dipped:
1.50pm GMT
13:50
Here’s our US business editor, Dominic Rushe, on today’s jobs report:
The US added 227,000 new jobs in January, the last month of the Obama presidency and the first of Donald Trump’s, the Department of Labor announced on Friday.
The closely watched figure was the best since last June and comes after Trump won the election promising jobs growth and pushing US companies to employ American citizens, threatening to tax imports of goods made outside US borders.
However, the report also highlights the struggle ahead for Trump and underlines Obama’s record on job creation. January marked the 76th consecutive month of job gains, the best on record. And the unemployment rate, at 4.8%, is in line with the Federal Reserve’s estimate for a normal job market.
Trump was a harsh critic of the government’s monthly job’s report during the election campaign. He claimed that 5% unemployment was “one of the biggest hoaxes in modern politics.” In August 2015, Trump told Time magazine that the real unemployment rate was 42%, at the time the Labor Department reading was 5.1%.
Here’s the full story:
1.48pm GMT1.48pm GMT
13:4813:48
Another reason to be worried about US earnings:Another reason to be worried about US earnings:
"Over the year, average hourly earnings rose by 2.5% in January, compared with 2.9% year over year last month." - @WSJecon"Over the year, average hourly earnings rose by 2.5% in January, compared with 2.9% year over year last month." - @WSJecon
1.48pm GMT1.48pm GMT
13:4813:48
Here’s some instant reaction, first from bond trading magnate Bill Gross:Here’s some instant reaction, first from bond trading magnate Bill Gross:
"I suppose it's good for corp, profits", says Gross @BloombergRadio. But ultimately it's the consumer drives the economy. YoY wage revision"I suppose it's good for corp, profits", says Gross @BloombergRadio. But ultimately it's the consumer drives the economy. YoY wage revision
This is from James Pethokoukis of the American Enterprise Institute:This is from James Pethokoukis of the American Enterprise Institute:
So strongish January jobs report, 227,000 jobs. Labor participation, emp-pop both up 0.2 - though an * b/c of population adjustmentSo strongish January jobs report, 227,000 jobs. Labor participation, emp-pop both up 0.2 - though an * b/c of population adjustment
Bloomberg’s Joe Weisenthal suggests there’s little pressure on the US central bank to hike rates fast.Bloomberg’s Joe Weisenthal suggests there’s little pressure on the US central bank to hike rates fast.
Key thing about this report is modest wage growth and jump in LFPR suggest no reason for the Fed to accelerate its hike schedule.Key thing about this report is modest wage growth and jump in LFPR suggest no reason for the Fed to accelerate its hike schedule.
Economist Shaun Richards points out that wage growth is still modest, even though the US economy is creating more jobs.Economist Shaun Richards points out that wage growth is still modest, even though the US economy is creating more jobs.
The theme of employment growth with wage growth underperforming just repeats and repeats in the credit crunch era doesn't it? #NFPThe theme of employment growth with wage growth underperforming just repeats and repeats in the credit crunch era doesn't it? #NFP
1.43pm GMT1.43pm GMT
13:4313:43
America’s labour force participation rate, which measures everyone working or available for work, has risen to 62.9% from 62.7%.America’s labour force participation rate, which measures everyone working or available for work, has risen to 62.9% from 62.7%.
That implies that some economically inactive people started looking for work again last month (and is one reason the jobless rate rose to 4.8%).That implies that some economically inactive people started looking for work again last month (and is one reason the jobless rate rose to 4.8%).
Labor Force Participation Rate rises from 62.7% to 62.9% pic.twitter.com/yae7COyB1qLabor Force Participation Rate rises from 62.7% to 62.9% pic.twitter.com/yae7COyB1q
1.41pm GMT1.41pm GMT
13:4113:41
The number of Americans who would like to work more hours went up last month.The number of Americans who would like to work more hours went up last month.
The U6 rate, which measure unemployment and underemployment, has risen to 9.4% from 9.2%.The U6 rate, which measure unemployment and underemployment, has risen to 9.4% from 9.2%.
U3 Unemployment Rate 4.8% vs 4.7% exp/prev.U6 UER 9.4% vs 9.2% prev.Avg Hourly Earnings +2.5% YoY vs 2.7% exp/2.9% prev.U3 Unemployment Rate 4.8% vs 4.7% exp/prev.U6 UER 9.4% vs 9.2% prev.Avg Hourly Earnings +2.5% YoY vs 2.7% exp/2.9% prev.
1.35pm GMT1.35pm GMT
13:3513:35
November’s jobs report has been revised, to show that only 164,000 new jobs were created, not 204,000 as first thought.November’s jobs report has been revised, to show that only 164,000 new jobs were created, not 204,000 as first thought.
December’s data has been revised up by 1,000, to 157,000.December’s data has been revised up by 1,000, to 157,000.
1.34pm GMT1.34pm GMT
13:3413:34
The wages figure is a disappointment!The wages figure is a disappointment!
Average earnings only rose by 0.1% month-on-month in January, dashing hopes of a 0.3% gain.Average earnings only rose by 0.1% month-on-month in January, dashing hopes of a 0.3% gain.
Average hour earnings up 0.1% in January vs. 0.3% expectations. YOY wages up 2.5% #JobsReport https://t.co/DClcu4FCnlAverage hour earnings up 0.1% in January vs. 0.3% expectations. YOY wages up 2.5% #JobsReport https://t.co/DClcu4FCnl
1.33pm GMT1.33pm GMT
13:3313:33
America’s jobless rate has risen to 4.8%, from 4.7% in December.America’s jobless rate has risen to 4.8%, from 4.7% in December.
1.30pm GMT
13:30
US JOBS REPORT RELEASED
BREAKING: America’s economy created 227,000 new jobs in January, as the Obama administration ended and the Trump administration began.
That’s more than economists had expected, and suggests that the US economy began 2017 in good health.
More to follow!
1.25pm GMT
13:25
Tension is building, with just five minutes to go....
Today begins Trump's long road to fulfilling his promise of 25 million (!) new jobs. Need 208.3 thousand every month
This jobs report predates Trump. Reference week for the numbers is January 12th. https://t.co/4sF3ickjTM
The first jobs report of the Trump presidency comes out in less than 10 minutes. Reminder that he thinks the unemployment rate is “phony.”
1.12pm GMT
13:12
US jobs report: a preamble
It’s nearly time for the US jobs report.... the first Non-Farm Payroll on Donald Trump’s watch.
Of course, Trump only took office on January 20th, so he can’t be credited or blamed for the state of America’s labo(u)r market. Of course, some firms will have made hiring decisions since the election on 9th November, but the impact of Trump’s policies will only be seen in NFP reports later this year and beyond.
Today’s report is effectively the starting point against which Trump will be judged.
Obama gets 2/3 of today's jobs report right? https://t.co/WHeYk8DWvg
A reminder: economists are expecting today’s report to be pretty decent, with around 180,000 new jobs created last month. The unemployment rate may also remain low, at 4.7%....
...however, Trump has criticised these figures for not showing the true picture in the jobs market. His team favour another measure, called U5, which includes people who have given up looking for work. That rate is currently running at 5.7%.
Economists will also be looking at the wage growth figures. Average earnings are expected to have risen by 0.3% during January, with the annual increase dipping to 2.8% from 2.9% in December.
12.47pm GMT
12:47
The Daily Telegraph have just published a handy explanation to the Dodd-Frank legislation.
Here’s a snippet:
If Dodd-Frank made banks safer, why is it being reviewed?
Scrapping legislation that stifles businesses was a central plank of Mr Trump’s election campaign, playing to his image as a successful tycoon who made billions in the private sector. Last November, he described Dodd-Frank as “a sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies”.
Mr Trump, who has also previously argued that Dodd-Frank “made it impossible for bankers to function”, pledged to “dismantle” the law and replace it with “new policies to encourage economic growth and job creation”. Last week, while signing an executive order aimed at reducing regulations, he described Dodd-Frank as a “disaster”. Republicans have long been opposed to the law.
More here:
Why does Donald Trump want to repeal the Dodd-Frank rules on banks and finance? https://t.co/RGhWxZjEm0 pic.twitter.com/MQpxx2Dccw
12.17pm GMT
12:17
It’s that time of the day when the US president wakes up, opens Twitter, and addresses the world....
Meeting with biggest business leaders this morning. Good jobs are coming back to U.S., health care and tax bills are being crafted NOW!
However, that meeting won’t include Travis Kalanick, the boss of Uber, who resigned from Trump’s economic advisory council following heavy criticism -- and a campaign to delete Uber.
11.51am GMT
11:51
In other banking news, Deutsche Bank is planning to cut 17% of its equities staff and 6% of its fixed-income staff globally, according to the Wall Street Journal.
It would be the latest stage in CEO John Cryan’s push to cut costs and return the company to profit (it reported a $2bn loss yesterday).
Deutsche Bank set to slash equities, fixed-income jobs https://t.co/z3y6xT6pMW
11.40am GMT
11:40
China and Germany reject Trump criticism over currencies
Earlier today, China’s government rejected claims from the Trump administration that it unfairly manipulates its currency.
Government spokesman Lu Kang told reporters in Beijing that China hopes to resolve concerns over global trade through talks, not through tit-for-tat devaluations.
Lu said:
China has never and won’t use a currency war to seek advantage in trade or to raise competitiveness in trade.
We have no intention of fighting a currency war. From a long-term perspective this is not beneficial to China.
(thanks to Reuters for the quotes).
Earlier this week, the president’s trade adviser caused a stir by claiming that Germany was getting an unfair advantage through the “grossly undervalued” euro.
German finance minister Wolfgang Schäuble has now hit back, pointing out that Berlin doesn’t actually control the euro....
*SCHAEUBLE: SOME IN U.S. NOT AWARE GERMAN GOVT NOT SETTING RATES
10.56am GMT
10:56
Mining shares are falling after China’s central bank raised short term interest rates overnight.
That is holding back the FTSE 100, which is up 30 points thanks to the Trump-induced rally in bank shares.
Michael Hewson of CMC Markets says:
The mining sector has slipped back this morning after a disappointing Chinese manufacturing survey as well as slight tightening of money market rates by Chinese authorities. It’s not immediately clear what prompted this action, though there is speculation about rising concerns about a property bubble, and this slight rise could well be an attempt to warn that tighter policy is on the way. Glencore, Antofagasta, BHP Billiton, Anglo-American PLC and Rio Tinto have all slipped lower at the open.
On the upside banking shares have gained a lift on speculation that US President Trump may well sign a new executive order to roll back some of the Dodd Frank regulatory bill, helping push Barclays and RBS higher.
10.37am GMT
10:37
Bank shares boosted by Trump
Shares in banks and insurance groups are rallying in London, following the reports that president Trump will take steps to dismantle regulations brought in to prevent another financial crisis.
The prospect of Trump blocking president Obama’s fiduciary rules also seem to be boosting demand for financial stocks. They were due to come into force in April, compelling financial advisors to recommend the best product to clients, not simply a suitable one.
Barclays are leading the FTSE risers, up 2.5%, followed by Prudential, and Royal Bank of Scotland.
Chris Beauchamp of City trading firm IG says:
UK bank stocks are higher across the board this morning, after the magic words ‘Dodd-Frank’ and ‘repeal’ flashed across screens last night; leaving aside the political implications, the news could provide a tonic for the sector.
Trump cannot simply demolish the Dodd-Frank rules on his own, but his executive orders still carry weight.
The FT has a good explanation:
Gary Cohn, the former Goldman Sachs executive who is now director of the White House’s National Economic Council, said Mr Trump would sign executive orders preparing the way to fulfil a campaign pledge to dismantle parts of Dodd-Frank.
However, the president’s ability to pull apart the sweeping reforms on his own is limited. Only Congress can make major revisions to the act it passed in 2010, but Mr Trump can use the orders to signal his priorities and instruct regulators enforcing the law.
“This is a table setter for a bunch of stuff that is coming,” said Mr Cohn, who stepped down as a top executive at Goldman Sachs to take the White House job.
Updated
at 10.41am GMT
9.57am GMT
09:57
Economists are concerned that Britain’s service sector slowed last month. Here’s some early reaction:
Dean Turner, UK Economist, UBS Wealth Management:
“The most notable aspect of the Services PMI was the ongoing strength of the input prices index, which rose again and is now above 60 level for the fourth consecutive month. Higher input prices will, in time, shift into selling prices otherwise firms will see their profits shrink. In line with the Manufacturing and Construction PMI, this points to inflation continuing its recent surge in the months ahead.
“Headline activity, although falling back slightly, suggests the economy is continuing to expand at a healthy pace, but one has to question its sustainability. Can the UK economy keep pace as inflation erodes the spending power of the consumer? We don’t share the Bank of England’s optimism that households will continue to whittle away their savings to support spending. Our conviction strengthened today with the softer outlook for employment highlighted in this survey.”
Howard Archer of IHS Global Insight:
Services have been the key UK growth driver along with consumer spending and January survey evidence for both has been softer. While these are surveys rather than hard data and not too much should be read into one month’s figures, it nevertheless fuels our suspicion that the UK economy will find life increasing difficult during 2017 and that growth will gradually lose buoyancy like a slow puncture.
Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking.
“There are some helpful economic ingredients that are keeping the PMI in positive territory. Healthy levels of employment and low interest rates mean consumers continue to spend. Business confidence has also been buoyed by a stronger than expected economic performance in 2016, and is likely to be further boosted by yesterday’s improved growth forecast from the Bank of England.
“However, some uncertainty remains and we’re seeing a cautious approach towards making major investment decisions across the services sector.”