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| 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 |
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| The pound continues to flounder against the dollar, both on worries about the political situation in the UK and of course, the strength of the US currency as the likelihood of a Federal Reserve interest rate rise in December increases. At the moment the pound is down 0.53% at $1.3047, albeit off its worst levels. Connor Campbell. financial analyst at Spreadex, said: | |
| Friday’s US non-farm jobs report only made the week worse for cable, despite a rather unpleasant headline figure. | |
| The non-farm number itself was as ugly as they come. For the first time in 7 years the reading came in negative, at -33k against the 82k forecast and the (upwards revised) 169k seen in August. Yet while the figure was far worse than expected, it actually wasn’t that surprising given it covered a period impacted by Hurricanes Irma and Harvey. | |
| Instead of lingering on the shrinking non-farm payrolls, investors’ attention turned to rest of the jobs report. Wage growth jumped significantly month-on-month, from 0.2% to 0.5%, while the unemployment rate hit a fresh 16 year low of 4.2%. It’s not a stretch to see those numbers as tipping the Fed’s dovish/hawkish scales towards the latter, with a December rate hike now coming into sharper focus. | |
| The dollar reacted as one would expect, widening its gains against the pound.., while taking 0.1% off the euro and half a percent off the yen... | |
| And what of poor, fragile sterling? Well September’s super surge is looking more and more like an anomaly, the Tories once again finding a way to undermine confidence in the currency. Cable’s stuck at a sub-$1.305 one month nadir, while against the euro the pound has cemented a fresh 3 week low after falling half a percent. And the thing is, there is no guarantee that next week will be any better, especially if the weekend papers are as filled with Tory infighting as one would expect. | |
| 3.23pm BST | |
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| Probability of a December Rate HikeOctober 6: 80%September 8: 19%*interest rate futures: Fed speak and wage pressure going the trick | |
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| 15:09 | |
| Dominic Rushe | |
| Here’s our report on the US jobs data. Dominic Rushe writes: | |
| The US jobs market stalled in September, losing 33,000 jobs, as Hurricanes Harvey and Irma took their toll. It was the first time in seven years that the US monthly total had recorded a fall. | |
| The US economy had added an average of 176,000 new jobs a month so far this year but as the labor department had predicted the storms, which caused fatal and catastrophic damage across Texas and Florida, slowed hiring. | |
| But a loss in jobs was far worse than the 80,000 new jobs most US economists had expected would be created. It ends the longest stretch of uninterrupted jobs growth in US history. This was the first loss in jobs since September 2010. | |
| Ahead of Friday’s jobs report the Bureau of Labor Statistics said some 11.2 million workers lived in the affected areas, about 7.7% of the US workforce. | |
| Employment in food services and drinking places declined by 105,000 in September. That sector has added an average of 24,000 jobs a month over the past 12 months. | |
| The unemployment rate, which was 4.4% in August, fell to 4.2%, a 16-year low. | |
| This is the second month of disappointing growth in the US jobs market. In August the economy added 156,000 new jobs, below the 180,000 that had been expected by economists. | |
| The full story is here: | |
| 2.50pm BST | 2.50pm BST |
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| Broader market down a bit this morning but bank stocks up. $XLF Translation? Investors still bet on December rate hike despite jobs report. | Broader market down a bit this morning but bank stocks up. $XLF Translation? Investors still bet on December rate hike despite jobs report. |
| 2.45pm BST | 2.45pm BST |
| 14:45 | 14:45 |
| Wall Street opens lower | Wall Street opens lower |
| After their recent record breaking runs, US markets have paused for breath. | After their recent record breaking runs, US markets have paused for breath. |
| Despite the weaker headline jobs figure, the dollar has strengthened on the basis that higher than expected wages growth means the Federal Reserve may well raise interest rates before the end of the year. In turn, that has put a small dampener on equities. | Despite the weaker headline jobs figure, the dollar has strengthened on the basis that higher than expected wages growth means the Federal Reserve may well raise interest rates before the end of the year. In turn, that has put a small dampener on equities. |
| So the Dow Jones Industrial Average is down 21 points or 0.09% while the S&P 500 opened 0.2% lower and the Nasdaq Composite dipped 0.25%. | So the Dow Jones Industrial Average is down 21 points or 0.09% while the S&P 500 opened 0.2% lower and the Nasdaq Composite dipped 0.25%. |
| 2.35pm BST | 2.35pm BST |
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| And here’s a link to the jobs report data: | And here’s a link to the jobs report data: |
| More charts and analysis on the September nonfarm payroll employment numbers https://t.co/g1NChl6Lxc #JobsReport #BLSdata | More charts and analysis on the September nonfarm payroll employment numbers https://t.co/g1NChl6Lxc #JobsReport #BLSdata |
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| 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 | 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 | 2.25pm BST |
| 14:25 | 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. | 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: | 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... | 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. | 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. | 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. | 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. | 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: | 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. | 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. | 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. | 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. |
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| Here is a chart showing clearly the impact on leisure and hospitality jobs: | Here is a chart showing clearly the impact on leisure and hospitality jobs: |
| And here is the unemployment data and monthly changes: | And here is the unemployment data and monthly changes: |
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| 14:11 | 14:11 |
| Other key figures from the non-farms report show the overall jobless rate fell unexpectedly to 4.2% from 4.4%. | 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%. | 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 | 2.04pm BST |
| 14:04 | 14:04 |
| US payrolls: hurricanes trigger first fall in seven years | 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 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. | 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: | 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. | 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. | 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. | 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 BST | 1.33pm BST |
| 13:33 | 13:33 |
| Breaking: US non-farm payrolls fall in September after hurricane disruption | Breaking: 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... |
| Updated | Updated |
| at 1.34pm BST | at 1.34pm BST |
| 1.29pm BST | 1.29pm BST |
| 13:29 | 13:29 |
| 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 BST | 1.20pm BST |
| 13:20 | 13:20 |
| 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 BST | 1.11pm BST |
| 13:11 | 13:11 |
| Food Standards Agency widens investigation into 2 Sisters | Food 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 BST | 12.16pm BST |
| 12:16 | 12:16 |
| Greek pensioners protest against further cuts | Greek pensioners protest against further cuts |
| Helena Smith | Helena 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. |
| Updated | Updated |
| at 12.18pm BST | at 12.18pm BST |
| 12.03pm BST | 12.03pm BST |
| 12:03 | 12:03 |
| 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 BST | 11.49am BST |
| 11:49 | 11:49 |
| Easyjet shares fall despite record summer passengers | Easyjet 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 BST | 11.28am BST |
| 11:28 | 11:28 |
| Britain less productive than the G7 average | Britain 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: |