This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/06/pound-hits-four-week-low-as-tory-leadership-dounts--business-live

The article has changed 8 times. There is an RSS feed of changes available.

Version 0 Version 1
US employment falls for first time in seven years amid hurricane destruction - business live US employment falls for first time in seven years amid hurricane destruction - business live
(35 minutes later)
2.33pm BST
14:33
If you doubt whether #NFP was distorted by hurricanes, just look at the number unable to work due to weather in h'hold survey. pic.twitter.com/jCmCr5jWx5
2.25pm BST
14:25
The dollar has moved higher following the US jobs data, despite a fall in the headline figure. Analysts point to the strong pay growth giving the Federal Reserve leeway to raise rates in December.
So sterling has hit a four week low against the dollar, while the US currency was at its strongest level against the euro since mid-August. Against the yen, the greenback hit its highest since mid-July. James Knightley, chief international economist at ING Bank, said:
Hurricane disruption dragged payrolls negative, but a big fall in unemployment and significant wage increases make a December rate hike look probable...
Despite the softness in payrolls the unemployment rate fell to 4.2% from 4.4%. The other big number is the 0.5% month on month jump in wages – the biggest increase since November 2008 – which takes the annual wage growth number up to 2.9%. Note that there were also some upward revisions to monthly wage rates so we may finally be seeing some of the strength in jobs feeding through into inflation pressures.
Payrolls will bounce back strongly given the Bureau for Labour Statistics suggests that 1.47mn people were unable to get to work because of storm disruption. Moreover, labour demand indicators remain strong in other reports.
This positive overall story on the labour market is only going to strengthen the case for higher interest rates. We already know that the growth outlook is strong – underlined by the ISM manufacturing and non-manufacturing surveys hitting 13 and 12 year highs respectively this week – and inflation is heading back towards target – next week’s headline CPI expected at 2.1% and core at 1.8% year on year.
The arguments justifying higher interest rates is also being broadened with Fed Chair Yellen suggesting “persistently easy monetary policy” could have “adverse implications for financial stability”, while warning of “somewhat rich” asset valuations. Relatively loose financial conditions – a flat yield curve and dollar weakness - have been used as arguments that could justify action by other Fed officials. It therefore seems that the main risk to our December rate hike call is politics and the potential for an economically and market disruptive government shutdown. However, we remain hopeful that this can be avoided clearing the way for another two rate hikes in 2018.
Manuel Ortiz-Olave, market analyst at Monex Europe, said:
Headline job creation had a rough time in September. Although a significant slowdown was expected after the summer’s tropical storms, not many forecasts were expecting to see a contraction. The most important surprise, however, comes from a significant increase in wage growth and a new drop in the unemployment rate to fresh 16-year lows.
Wage growth has been the last piece of the inflation puzzle for the Federal Reserve over the last several quarters, as it remained stubbornly low despite a strong economic recovery and continued new lows in the unemployment rate. Albeit late, wage growth finally made an appearance in September with a massive increase well above expectations. Despite the contraction in employment, the three-month average of headline job creation remains above 100.000 jobs/month, which will not discourage the Fed from a hike.
There can be no more doubt, the Federal Reserve will hike interest rates before year end as already strong data now has the support of the Fed’s “prodigal son”: wage growth. This suggests the economy will grow at a strong pace in the last quarter of the year.
2.17pm BST
14:17
Here is a chart showing clearly the impact on leisure and hospitality jobs:
And here is the unemployment data and monthly changes:
2.11pm BST
14:11
Other key figures from the non-farms report show the overall jobless rate fell unexpectedly to 4.2% from 4.4%.
Pay growth was also better-than-expected, picking up to 0.5% in September from 0.2% in August. Economists were predicting a smaller rise to 0.3%.
2.04pm BST
14:04
US payrolls: hurricanes trigger first fall in seven years
The impact on jobs of Hurricanes Harvey and Irma was far greater than economists had predicted in September.
The 33,000 fall in non-farm payrolls was the first drop in seven years after workers were displaced and firms delayed hiring. There was a record drop in employment in the leisure and hospitality sectors. Employment in food services and drinking places fell by 105,000 in September, in an industry where most workers are not paid when absent from work.
William Wiatrowski, acting commissioner at the US Bureau of Labor Statistics, provided some context to the figures:
In September, a sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.
The storms caused large-scale evacuations and severe damage to many homes and businesses. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. Many employees in areas affected by the hurricanes were likely off payrolls during the reference pay period for September.
In September, 1.5 million workers had a job but were not at work for the entire reference week due to bad weather, the highest level for this series over the past 20 years. This series is highly sensitive to the timing of weather events and thus does not capture the immediate effect of all such events on the job market.
1.33pm BST1.33pm BST
13:3313:33
Breaking: US non-farm payrolls fall in September after hurricane disruptionBreaking: US non-farm payrolls fall in September after hurricane disruption
Payrolls actually fell by 33,000 last month in figures just out, far worse than expected.Payrolls actually fell by 33,000 last month in figures just out, far worse than expected.
Economists had predicted 90,000 jobs would be added. Figures for August were revised up to show 169,000 jobs were added (up from a previous estimate of 156,000).Economists had predicted 90,000 jobs would be added. Figures for August were revised up to show 169,000 jobs were added (up from a previous estimate of 156,000).
#UnitedStates Non Farm Payrolls at -33K https://t.co/AL0r1gqseN pic.twitter.com/k39zqwxVWR#UnitedStates Non Farm Payrolls at -33K https://t.co/AL0r1gqseN pic.twitter.com/k39zqwxVWR
More soon...More soon...
UpdatedUpdated
at 1.34pm BSTat 1.34pm BST
1.29pm BST1.29pm BST
13:2913:29
Andy Haldane, the Bank of England’s chief economist, is speaking about trust at the Royal Society of Arts in London.Andy Haldane, the Bank of England’s chief economist, is speaking about trust at the Royal Society of Arts in London.
He says that in some ways, loss of trust in institutions is the very definition of a financial crisis, including the most recent one which has been “hugely trust-busting”.He says that in some ways, loss of trust in institutions is the very definition of a financial crisis, including the most recent one which has been “hugely trust-busting”.
Even as the scars of this crisis heal, this trust deficit might not repair itself naturally. The trust deficit that those in money and finance face may be not cyclical, not temporary, but structural and permanent.Even as the scars of this crisis heal, this trust deficit might not repair itself naturally. The trust deficit that those in money and finance face may be not cyclical, not temporary, but structural and permanent.
And if that’s true, then those of us within financial services, including central banks, will really have to go some to repair that deficit.And if that’s true, then those of us within financial services, including central banks, will really have to go some to repair that deficit.
1.20pm BST1.20pm BST
13:2013:20
US non-farm payrolls for September are coming up at 1.30pm.US non-farm payrolls for September are coming up at 1.30pm.
Economists polled by Reuters are predicting the number of jobs added last month fell sharply to 90,000, from 156,000 in August, largely as a result of hurricane disruption.Economists polled by Reuters are predicting the number of jobs added last month fell sharply to 90,000, from 156,000 in August, largely as a result of hurricane disruption.
1.11pm BST1.11pm BST
13:1113:11
Food Standards Agency widens investigation into 2 SistersFood Standards Agency widens investigation into 2 Sisters
The Food Standards Agency (FSA) has announced it is extending its investigations to other 2 Sisters poultry plants in England and Wales, as well as its scandal-hit West Bromwich chicken processing plant.The Food Standards Agency (FSA) has announced it is extending its investigations to other 2 Sisters poultry plants in England and Wales, as well as its scandal-hit West Bromwich chicken processing plant.
It follows a Guardian and ITV News investigation that revealed poor hygiene standards and food safety records being altered.It follows a Guardian and ITV News investigation that revealed poor hygiene standards and food safety records being altered.
The FSA said that while it had not identified food safety issues at West Bromwich, the inspection “highlighted issues requiring management attention, for example in relation to some aspects of staff training and stock control”.The FSA said that while it had not identified food safety issues at West Bromwich, the inspection “highlighted issues requiring management attention, for example in relation to some aspects of staff training and stock control”.
Heather Hancock, chairman of the Food Standards Agency, said it was extending its investigation until it is satisfied that there is no risk to public health.Heather Hancock, chairman of the Food Standards Agency, said it was extending its investigation until it is satisfied that there is no risk to public health.
12.16pm BST12.16pm BST
12:1612:16
Greek pensioners protest against further cutsGreek pensioners protest against further cuts
Helena SmithHelena Smith
Over in Greece pensioners have been protesting outside the country’s highest administrative court against further cuts demanded by international creditors. It is the second such demonstration this week as anger mounts over the spectre of yet more cutbacks next year. Helena Smith reports.Over in Greece pensioners have been protesting outside the country’s highest administrative court against further cuts demanded by international creditors. It is the second such demonstration this week as anger mounts over the spectre of yet more cutbacks next year. Helena Smith reports.
Gathering outside the Council of State, pensioners shouted “shame on you” as judges met to consider the legality of pensions being further trimmed back. Since the onset of the crisis in late 2009, pensions have been cut 12 times with unionists claiming some 1.5 million retirees are now living on less than €500 a month. The latest reforms would mean yet more “dramatic reductions.”Gathering outside the Council of State, pensioners shouted “shame on you” as judges met to consider the legality of pensions being further trimmed back. Since the onset of the crisis in late 2009, pensions have been cut 12 times with unionists claiming some 1.5 million retirees are now living on less than €500 a month. The latest reforms would mean yet more “dramatic reductions.”
Earlier this week pensioners took to the streets in another show of anger, holding large banners deploring the cuts. With unemployment still hovering around 22%, families are often forced to survive on the pensions of elderly members.Earlier this week pensioners took to the streets in another show of anger, holding large banners deploring the cuts. With unemployment still hovering around 22%, families are often forced to survive on the pensions of elderly members.
Greece’s debt crisis has hit retirees harder than perhaps any other age group. An estimated 22.2% of the country’s population is “severely materially deprived” unable to fend for themselves, or pay basic bills, according to the EU statistics agency, Eurostat.Greece’s debt crisis has hit retirees harder than perhaps any other age group. An estimated 22.2% of the country’s population is “severely materially deprived” unable to fend for themselves, or pay basic bills, according to the EU statistics agency, Eurostat.
UpdatedUpdated
at 12.18pm BSTat 12.18pm BST
12.03pm BST12.03pm BST
12:0312:03
Howard Archer, chief economic advisor to the EY Item forecasting group, has analysed the UK productivity figures and says Brexit negotiations could further hold back progress:Howard Archer, chief economic advisor to the EY Item forecasting group, has analysed the UK productivity figures and says Brexit negotiations could further hold back progress:
There is a risk that prolonged uncertainty may end up weighing down markedly on business investment and damage productivity. Prolonged difficult Brexit negotiations could increase this risk.There is a risk that prolonged uncertainty may end up weighing down markedly on business investment and damage productivity. Prolonged difficult Brexit negotiations could increase this risk.
This could also be compounded if foreign companies markedly reduce their investment in the UK, diluting any beneficial spill-over of skills and knowledge.This could also be compounded if foreign companies markedly reduce their investment in the UK, diluting any beneficial spill-over of skills and knowledge.
Read our full story on the figures here:Read our full story on the figures here:
11.49am BST11.49am BST
11:4911:49
Easyjet shares fall despite record summer passengersEasyjet shares fall despite record summer passengers
Easyjet is the biggest faller in the FTSE 100 with shares down 2.7% this morning.Easyjet is the biggest faller in the FTSE 100 with shares down 2.7% this morning.
The low cost carrier is down despite flying a record 24.1m passengers in the three months to September. The airline also said in a trading update that it was on track to make annual profits of £405-£410m, at the higher end of its guidance but below last year’s £495m.The low cost carrier is down despite flying a record 24.1m passengers in the three months to September. The airline also said in a trading update that it was on track to make annual profits of £405-£410m, at the higher end of its guidance but below last year’s £495m.
Investors are also nervous about what the future holds, after chief executive Carolyn McCall said industry conditions remain “challenging”.Investors are also nervous about what the future holds, after chief executive Carolyn McCall said industry conditions remain “challenging”.
The FTSE 100’s worst performer’s this morning:The FTSE 100’s worst performer’s this morning:
11.28am BST11.28am BST
11:2811:28
Britain less productive than the G7 averageBritain less productive than the G7 average
A separate report from the ONS shows that the UK was less productive than the average among the G7 advanced economies in 2016.A separate report from the ONS shows that the UK was less productive than the average among the G7 advanced economies in 2016.
Output per hour worked in the UK was 15.1% below the average in 2016, compared with 15.5% below in 2015.Output per hour worked in the UK was 15.1% below the average in 2016, compared with 15.5% below in 2015.
The UK was however more productive than Canada and Japan:The UK was however more productive than Canada and Japan:
11.11am BST
11:11
UK productivity falls in April to June
Britain was less productive between April and June compared with the previous quarter, with output per hour worked down 0.1%.
It was dragged down by the manufacturing sector, where productivity fell in the second quarter by 1.3% according to the Office for National Statistics. Meanwhile services sector productivity was up 0.2% over the period.
Geraint Johnes, Professor of Economics at Lancaster University Management School, said the weak figures do not bode well for UK wages, which are already rising at a slower rate than prices:
Poor productivity performance underpins the stagnation of real wages, and presents the government with a particular challenge since it appears likely that previous forecasts of earnings, and hence also of tax revenues, have been overoptimistic.
Commenting, on today’s productivity figures, ONS Head of Productivity Philip Wales said: https://t.co/gJg5IopFKT pic.twitter.com/zkhiDZ1j2i
Updated
at 11.20am BST
10.33am BST
10:33
David Madden, analyst at CMC Markets, has this take on developments in Spain and the implications for markets:
The IBEX has been hit by profit taking as yesterday’s impressive bounce back was short lived. The decision by Madrid to suspend the Catalan parliament is a short-term solution to the problem, as the two sides are still locked in a stalemate.
The Spanish government is in the process of making it easier for companies headquartered in Catalonia to switch their head office to another part of Spain. While Madrid is keeping the pressure on Catalonia, it is likely that dealers will steer clear of the Spanish stock market.
10.11am BST
10:11
Catalonian defiance triggers Spanish sell-off
Spanish equities and government bonds are underperforming other European markets after Catalonia’s head of foreign affairs said the region’s parliament would meet on Monday.
It is in defiance of Madrid, after the the Spanish constitutional court suspended the Catalan parliament, threatening more tensions and instability.
The Spanish IBEX is down 0.8% at 10,138, while yields on benchmark 10-year bonds were up seven basis points at 1.76%.
9.42am BST
09:42
Halifax house prices reaction
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors:
Once again, the market has proved its resilience and confounded the doom mongers. Not that there is too much to get excited about with these figures which confirm what we have seen at the coalface recently - that prices are holding up reasonably well where vendors are realistic, partly in response to a continuing shortage of stock.
Sadly, we are not seeing the hoped-for autumn bounce but a steady market is more than welcome with so much uncertain economic news.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, is not convinced by the Halifax report:
The sudden surge in Halifax’s measure of house prices—up 3% over the last three months alone—is impossible to reconcile with all the other housing market evidence.
Halifax’s measure is the most volatile of all the indices we track. Other surveys show that the pipeline of demand is soft; RICS has reported that new buyer enquiries have fallen in six of the last seven months. Real wages still have further to fall over the next six months and mortgage rates will rise soon in response to the increase in banks’ funding costs.
As such, we expect most of the pickup in Halifax’s index to unwind over the coming months.
Jonathan Hopper, managing director of Garrington Property Finders, says that a flight of equity from London is fuelling activity in the regions:
In the current cautious market, prices treading water is good – and stability plus gentle growth is very good.
But momentum remains patchy and what growth there is is wavering rather than sustained, and prices remain under intense pressure in several key regions.
In London, prices have been sliding in many of the areas that saw the frothiest rates of growth during the boom.
On the flipside, the flight of equity from the capital is fuelling activity in several regional markets where affordability and perceived value for money is now enticing higher volumes of buyers.
9.23am BST
09:23
Halifax said UK house prices are partly being propped up by a shortage of homes on the market:
9.03am BST
09:03
Sign up to our email
Guardian Business has launched a daily email.
Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.
For your morning shot of financial news, sign up here:
8.56am BST
08:56
UK house price growth hit eight-month high
Annual house prices rose by 4% in September according to the Halifax price index.
It was the strongest rate of growth since February, bucking the trend of other recent reports which have indicated a weakening market.
Over the month, prices were up 0.8% reaching a record high of £255,109, and smashing economists’ expectations of a 0.1% increase.
August’s figure was also revised up to show 1.5% growth over the month, up from a previous estimate of 1.1%.
House prices in the three months to September were 1.4% higher than in the previous quarter, the fastest quarterly increase since February.
Russell Galley, managing director of Halifax Community Bank:
The annual rate of growth has picked up for the second consecutive month, rising from 2.6% in August to 4% in September. The average house price is now £225,109 – the highest on record.
UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment.
However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand.
Investors and economists are increasingly betting that Bank of England policymakers will raise interest rates for the first time in more than a decade in November.
Galley says this shouldn’t weigh on the housing market:
There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes.
Updated
at 9.51am BST
8.44am BST
08:44
S&P enjoys longest record streak in 20 years
Wall Street hit fresh record highs on Thursday, with risk appetite among investors boosted by signs of a robust US economy.
The S&P 500 closed up 0.6% at 2,552.07. It was the sixth consecutive closing high for the first time in more than 20 years.
Jasper Lawler, head of research at London Capital Group:
A backdrop of strong economic data, optimism for corporate earnings in the third quarter and the recently released plan for tax cuts are fuelling the latest surge.
It’s hard to see how Donald Trump’s plan to revamp the US economy can live up to the hyped-up expectations but repeatedly fresh record highs indicate confidence not caution.
8.33am BST
08:33
European markets subdued ahead of non-farm payrolls
It’s pretty quiet in markets across Europe this morning, as markets await the main event at 1.30pm with the publication of the US non-farm payrolls report in September.
Markets are feeling a little more relaxed about developments in Spain, where politicians in Catalonia do no seem able to agree on the best way forward. For now at least, that is helping to ease investor fears.
In the UK the FTSE 100 is up just 9 points but is comfortably above the 7,500 mark, having gained 300 points in three weeks.
The latest scores:
FTSE 100: +0.1% at 7,517
Germany’s DAX: +0.02% at 12,971
France’s CAC: -0.2% at 5,371
Italy’s FTSE MIB: -0.4% at 22,476
Spain’s IBEX: -0.4% at 10,177
Europe’s STOXX 600: -0.1% at 390
8.15am BST
08:15
The agenda: pound hits four-week low; US non-farm payrolls day
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone crisis and business.
The pound is under renewed pressure this morning as uncertainty builds over Theresa May’s future as Prime Minister.
Grant Shapps, a Tory MP and a former party chairman, has admitted his role in a plan to put pressure on May to call a leadership election.
He said MPs were “perfectly within their rights” to call for a contest after May’s gamble to win a bigger majority at the general election did not pay off.
He told BBC radio 5 live:
We did have a result that was not at all what anyone wanted, least of all what she wanted or anticipated, and... sometimes when things happen you have to take responsibility for them.
This is a view I have held for quite some time and quite a lot of colleagues feel the same way, including five former cabinet ministers.
The pound is down 0.4% at $1.3065. That’s the lowest against the dollar since 7 September. It’s partly a story of dollar strength as traders bet on a December US interest rate rise.
But the pound is also at a three-week low against the euro, down 0.3% at €1.1169.
CMC’s Michael Hewson gives this take:
The pound has had another poor week its third weekly decline in a row, as concerns about political instability as well as disappointing economic data have undermined sentiment.
seems likely that this discontent will once again amount to nothing more than hot air in the short term at least. The last thing the currency, the Conservative party and more importantly the country needs right now is the self-indulgence of another leadership battle.
Also coming up today...
8.30am BST: September’s Halifax house prices report will provide the latest snapshot of the UK housing market.
9.30am BST: UK productivity figures for April to June. British productivity has been pretty dismal in recent years and policymakers believe improvement here is the key to unlocking stronger wage growth. We’ll bring you the latest.
1.30pm BST: The closely watched non-farm payrolls for September. Economists are predicting a sharp fall in the number of jobs added, to 90,000 in September, from 156,000 in August, as a result of hurricane disruption. The report will also give the latest insight into the pace of earnings growth in the world’s largest economy.
Updated
at 8.21am BST