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US economy created just 148,000 jobs in December as retailers lay off staff - business live Wall Street hits fresh record high after disappointing US jobs report - business live
(35 minutes later)
Boom! The US stock market has hit fresh record highs (yet again) at the start of trading in New York.
Traders are shrugging off the news that America’s job creation slowed last month.
The Dow Jones continued its march upwards, gaining 70 points to 25,145. The S&P 500 and the Nasdaq are also pushing higher, as the bull market shows no inclination to fizzle out.
But while shares rise, the US dollar has dropped.
Jacob Deppe, Head of Trading at online trading platform, Infinox, explains:
“Surprisingly, Wall Street shook off the lower than expected jobs data and rose still higher, although the Dollar fell 0.3% versus the Euro and 0.26% versus the Pound on the news.
“December’s Non-Farm Payrolls data does not fit the current narrative of booming US growth. The initial reaction from the market is to ignore. That could be perilous.
“It’s also possible markets have decided the recent harsh weather contributed to the slowdown in jobs
The good news is that America’s economy has now created jobs for 87 months in a row - dating back to early in Barack Obama’s first term as president.
That has helped to pull the jobless rate down to its lowest since the end of 2000, at just 4.1%.
Bart Hordijk, Market Analyst at Monex Europe, says the US may be approaching full employment:
“2017 has been an extraordinary year for the US labour market, with around 200K jobs added every month, leading the Unemployment Rate to its lowest point in 16 years. The fact that we now see a slowdown can be more of a sign of employers not being able to find qualified personnel, than it is an indicator of weakness in the US economy.
Despite the fact that the Hourly Earnings Growth remains soft, this can report can still be a nudge for the Federal Reserve in the direction of hiking the rates.
The 148,000 increase in the US non-farm payroll last month was “slightly disappointing’, says Paul Ashworth of Capital Economics.
He also singles out the drop in retail employment:
Looking at the December gain in detail, manufacturing had a strong month, adding 25,000 jobs. Given the strength of the global economy, the decline in the dollar and the recent strength evident in the surveys, we can expect further factory job gains in the next few months.
The obvious weakness was in retail, which shed 20,300 jobs. That could be just noise or a consequence of the shift from bricks and mortar stores to online. As a comparison, couriers & messengers added only 2,100 jobs, so in net terms the structural shift is hardly positive for employmen
Kully Samra, UK Managing Director at Charles Schwab, says:Kully Samra, UK Managing Director at Charles Schwab, says:
“The US economy ended on a mixed note in 2017.“The US economy ended on a mixed note in 2017.
However, despite disappointing job numbers, over the year average hourly earnings have risen by 2.5%. In addition, we have seen the economy grow quarter on quarter, manufacturing and services indices rise and other factors such as business confidence and housing are also picking up.However, despite disappointing job numbers, over the year average hourly earnings have risen by 2.5%. In addition, we have seen the economy grow quarter on quarter, manufacturing and services indices rise and other factors such as business confidence and housing are also picking up.
Here’s Ian Kernohan, economist at Royal London Asset Management, on today’s Non-Farm Payroll:Here’s Ian Kernohan, economist at Royal London Asset Management, on today’s Non-Farm Payroll:
“There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate. Wage growth ticked higher to 2.5%, still a very modest rate despite the sharp fall in unemployment over the past few years.“There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate. Wage growth ticked higher to 2.5%, still a very modest rate despite the sharp fall in unemployment over the past few years.
“The Federal Reserve puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP. Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March.”“The Federal Reserve puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP. Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March.”
Jobs site Indeed.com have made a handy charts showing where jobs were created, or destroyed, last month across the US economy:Jobs site Indeed.com have made a handy charts showing where jobs were created, or destroyed, last month across the US economy:
Construction and information led job growth in December, with manufacturing picking up steam. Retail lost jobs -- again. pic.twitter.com/VcicEJOYZbConstruction and information led job growth in December, with manufacturing picking up steam. Retail lost jobs -- again. pic.twitter.com/VcicEJOYZb
Ben Casselman of the New York Times is also worried by the fall in retail jobsBen Casselman of the New York Times is also worried by the fall in retail jobs
Weird few months for retail. But the big picture is clear: big job losses in a huge sector for (mostly low-wage) employment. pic.twitter.com/XQJNCwBrKEWeird few months for retail. But the big picture is clear: big job losses in a huge sector for (mostly low-wage) employment. pic.twitter.com/XQJNCwBrKE
Seth Harris, who was deputy US labor secretary under president Obama, is concerned by the rise in under-employment (the U-6 rate).Seth Harris, who was deputy US labor secretary under president Obama, is concerned by the rise in under-employment (the U-6 rate).
He tweets:He tweets:
#Jobs report toplines: 1. Fewer jobs in Dec. means little. 2. 2d month U-6 increased; growth in involuntary part-time concerning 3. #Wages=disappointing 2.5% nominal increase/year, meager 0.3% real increase 4. Middle-wage industries growing (mfring, constr'n); retail shrinking.#Jobs report toplines: 1. Fewer jobs in Dec. means little. 2. 2d month U-6 increased; growth in involuntary part-time concerning 3. #Wages=disappointing 2.5% nominal increase/year, meager 0.3% real increase 4. Middle-wage industries growing (mfring, constr'n); retail shrinking.
Yikes! America’s retail sector cut around 20,000 jobs last month, according to today’s non-farm payroll.Yikes! America’s retail sector cut around 20,000 jobs last month, according to today’s non-farm payroll.
That could be proof that the rise of internet shopping is forcing Main Street stores to cut back.That could be proof that the rise of internet shopping is forcing Main Street stores to cut back.
The Amazon effect? Retail jobs down 20K in December and 67K for the full year.The Amazon effect? Retail jobs down 20K in December and 67K for the full year.
The retail apocalypse carries on. It dropped 20k jobs in December, adding up to 67,000 total jobs lost in 2017. It added 203k jobs in 2016.The retail apocalypse carries on. It dropped 20k jobs in December, adding up to 67,000 total jobs lost in 2017. It added 203k jobs in 2016.
The NFP report also shows a 55,000 increase in goods-producing jobs, a 30,000 increase in construction, and a 91,000 increase in service-sector roles.The NFP report also shows a 55,000 increase in goods-producing jobs, a 30,000 increase in construction, and a 91,000 increase in service-sector roles.
Worryingly, the US under-employment rate rose to 8.1% in December, from 8.0% in October.Worryingly, the US under-employment rate rose to 8.1% in December, from 8.0% in October.
That means more Americans wanted to work more hours than they were able.That means more Americans wanted to work more hours than they were able.
In better news, November’s non-farm payroll has been revised up to show 252,000 new jobs were created (up from 228,000).In better news, November’s non-farm payroll has been revised up to show 252,000 new jobs were created (up from 228,000).
But what the revisions give with one hand, they take with the other. October’s NFP has been revised down to 211,000, from 244,000.But what the revisions give with one hand, they take with the other. October’s NFP has been revised down to 211,000, from 244,000.
Instant reaction - this isn’t a great jobs report. It’s not a disaster either.
Mediocre numbers.Jobs comes in at just 148K.Wages come in in line, but last month revised a tick lower.Unemployment steady but underemployment ticks higher. https://t.co/lr58ZiB7v6
Ouch
On wages..... earnings rose by 2.5% per year in December, as expected.
But November’s wage data has been revised down, to 2.4% (from 2.5%).
Breaking! The US economy created 148,000 new jobs in December.
That’s rather less than the 190,000 which economists had predicted.
The unemployment rate has come in at 4.1% - unchanged on last month.
More to follow.....
No argument....
This is definitely going to be the most exciting 2017 NFP report of 2018.
Just five minutes to go, and the excitement is building....
#EYETWITCHES
The US jobs report is notoriously hard to predict, and invariably revised sometime in the future.
But the Non-Farm Payroll is still one of the most eagerly awaited pieces of economic data in the calendar, as it gives an insight into how the world’s largest labo(u)r market is performing.
As Naeem Aslam of Think Markets puts it:
Today is the day- the most important economic data, the US Non-Farm Payroll number, on the face of the earth will reveal its colour.
This number sets the trading tone and the trend for the rest of the month for traders. Today’s number would provide us significant clues if the moderate growth in the US economy has left any impact on the jobs market, most importantly on the wage growth. Since the financial recession, the jobs market has been strengthening and this momentum was set by former President Barak Obama and Mr Trump is reaping the rewards.
World stock markets are at record levels today, partly thanks to Britain’s FTSE 100 hitting new heights this morning.
And Wall Street is likely to push the bull market even higher when trading begins -- unless the US jobs report is a shock.
Lukman Otunuga, Research Analyst at FXTM says:
Another day, another record high for world stocks, as a growing sense of optimism over the global economy boosts risk sentiment.
Asian shares ventured higher during early trading on Friday, while European markets opened on a positive note amid the risk-on environment. With the Dow Jones Industrial Average surpassing 25,000 for the first time ever on Thursday, U.S equity bulls are clearly back in town and as such, we could see further gains on Wall Street this afternoon.
Investors on both side of the Atlantic are bracing for the latest US jobs report to hit the wires, in 35 minutes time.
December’s Non-Farm Payroll is expected to show that America’s economy created around 190,000 new jobs last month, leaving the unemployment rate at just 4.1%.
However, there is talk that the NFP could be better, after another survey yesterday suggested that US firms hired 250,000 people in December.
Here’s a round-up of the latest Wall Street forecasts:
US NFP (Dec) 1330GMTUBS 205kCredit Suisse 200kRBC 200kScotia 200k SocGen 200kHSBC 195kExp. 190kCommerzbank 190kLloyds 190kMS 190k Nomura 190kBofA 185kDB 185kCiti 180kWell Fargo 180kBNP 175k GS 175kJPM 175kING 170k
Economists will also be looking closely at the wage growth figures, for signs that the US economic recovery is reaching workers’ pockets.
Average earnings are expected to have risen by 2.5% per year, the same as a month ago, and by 0.3% in December alone.
Craig Erlam of City firm Oanda says:
We’ve been promised higher inflation and wage growth for some time and investors are increasingly not buying it.
Even some policy makers are starting to question why nothing has not materialised and should that continue, rate hike forecasts will start to slip, especially with interest rates now already elevated. Today’s jobs report should offer some insight on this, with average earnings having arguably become the most important component of it. Still earnings are only expected to have risen by 2.5% compared to a year ago, below last year’s peak and well below where they need to be for inflation to sustainably return to target.
Whatever happens, we’ll probably hear Donald Trump’s views through the usual channel....
#NFPGuesses Beats consensus, Dow pops, Trump tweets
The Labour Party is also voicing concerns about the drop in UK car sales last year.
Rebecca Long-Bailey MP, Labour’s Shadow Business Secretary, says:
“The Government’s mismanagement of the economy and mishandling of the Brexit negotiations has shaken consumer and business confidence and it’s concerning that the sales of new cars are falling.
“The industry has been warning the Government time and time again and, as has become typical with the Tories, they have failed to listen or take action.
“The British car industry is a vital part of our economy, directly employing up to 170,000 people. Labour’s Industrial Strategy will set out a radical programme of investment and genuine partnership between industry and government, to protect vital jobs and build an economy that works for the many, not the few.”
Here’s our financial editor, Nils Pratley, on the idea that markets are in a melt-up phase: