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| US unemployment rate hits eight-year low, but job creation slows - business live | US unemployment rate hits eight-year low, but job creation slows - business live |
| (35 minutes later) | |
| 4.01pm GMT | |
| 16:01 | |
| Markets are extending their losses as investors look to the rise in US average earnings and conclude that perhaps there will be more rate rises from the Federal Reserve this year after all. | |
| The Dow Jones Industrial Average is now down 150 points or 0.9%, while in Europe the FTSE 100 has fallen 20 points and Germany’s Dax is down 34 points. | |
| The dollar - which has been weak all week - has also recovered some ground after the figures. The dollar index is currently up 0.6% to 97.07 after hitting a 15 week low on Thursday. | |
| US investors are also nervous after a slump in the shares of Linkedin, which has weighed on other tech companies. | |
| Updated | |
| at 4.07pm GMT | |
| 3.49pm GMT | |
| 15:49 | |
| Something a bit lighter on non-farms day: | |
| Twitter thought this @FerroTV #jobs tweet was in French. pic.twitter.com/p2icWi3i5N | |
| 3.13pm GMT | 3.13pm GMT |
| 15:13 | 15:13 |
| Larry Elliott | Larry Elliott |
| Back with the US jobs data, and the weaker than expected headline figure adds to the feeling the Federal Reserve erred in raising interest rates in December, says Larry Elliott: | Back with the US jobs data, and the weaker than expected headline figure adds to the feeling the Federal Reserve erred in raising interest rates in December, says Larry Elliott: |
| Hindsight is a wonderful thing. It’s easy to be wise after the event and say a decision was a mistake. But it’s hard to imagine that the Federal Reserve would have raised interest rates in December had it known then what it knows now. | Hindsight is a wonderful thing. It’s easy to be wise after the event and say a decision was a mistake. But it’s hard to imagine that the Federal Reserve would have raised interest rates in December had it known then what it knows now. |
| News that employment growth as measured by the increase in non-farm payrolls was up by 151,000 is just the latest piece of evidence to suggest that the US economy is going through a tough period. Growth in the fourth quarter was weak, sales of durable goods suggest that businesses are reluctant to invest, and consumers are saving rather than spending the windfall from lower oil prices. | News that employment growth as measured by the increase in non-farm payrolls was up by 151,000 is just the latest piece of evidence to suggest that the US economy is going through a tough period. Growth in the fourth quarter was weak, sales of durable goods suggest that businesses are reluctant to invest, and consumers are saving rather than spending the windfall from lower oil prices. |
| Even so, Janet Yellen, chairman of the Fed, is not going to hit the panic button and reverse December’s increase – at least not yet. There are two reasons for that: a U-turn would be a considerable blow to the central bank’s reputation; and the Fed will want to see more evidence before it decides that the world’s biggest economy is heading for a recession rather than simply going through a temporary soft patch. | Even so, Janet Yellen, chairman of the Fed, is not going to hit the panic button and reverse December’s increase – at least not yet. There are two reasons for that: a U-turn would be a considerable blow to the central bank’s reputation; and the Fed will want to see more evidence before it decides that the world’s biggest economy is heading for a recession rather than simply going through a temporary soft patch. |
| Larry’s full analysis is here: | Larry’s full analysis is here: |
| Related: Weak US employment growth further suggests Fed rate rise was a mistake | Related: Weak US employment growth further suggests Fed rate rise was a mistake |
| Updated | Updated |
| at 3.14pm GMT | at 3.14pm GMT |
| 3.08pm GMT | 3.08pm GMT |
| 15:08 | 15:08 |
| Really the worst of both worlds for PT government. Long list of austerity measures and still gets budget smashed by Commission | Really the worst of both worlds for PT government. Long list of austerity measures and still gets budget smashed by Commission |
| 2.59pm GMT | 2.59pm GMT |
| 14:59 | 14:59 |
| EU says Portuguese budget "non-compliant" but will be re-assessed in Spring | EU says Portuguese budget "non-compliant" but will be re-assessed in Spring |
| The European Commission has said that it accepts the Portuguese budget after some changes, but it is still at risk of non-compliance with EU rules. It will assess the budget again in the spring. It said: | The European Commission has said that it accepts the Portuguese budget after some changes, but it is still at risk of non-compliance with EU rules. It will assess the budget again in the spring. It said: |
| The European Commission considers that the Portuguese government’s 2016 Draft Budgetary Plan is at risk of non-compliance with the provisions of the Stability and Growth Pact. In its Opinion adopted today, the Commission therefore invites the authorities to take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the Stability and Growth Pact. | The European Commission considers that the Portuguese government’s 2016 Draft Budgetary Plan is at risk of non-compliance with the provisions of the Stability and Growth Pact. In its Opinion adopted today, the Commission therefore invites the authorities to take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the Stability and Growth Pact. |
| Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: “...The Portuguese Government is invited to take the necessary steps to ensure that the 2016 budget is compliant. In spring, the Commission will reassess Portugal’s compliance with its obligations under the Stability and Growth Pact, including under the Excessive Deficit Procedure.” | Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: “...The Portuguese Government is invited to take the necessary steps to ensure that the 2016 budget is compliant. In spring, the Commission will reassess Portugal’s compliance with its obligations under the Stability and Growth Pact, including under the Excessive Deficit Procedure.” |
| The full statement is here: | The full statement is here: |
| European Commission adopts Opinion on Portugal’s 2016 Draft Budgetary Plan | European Commission adopts Opinion on Portugal’s 2016 Draft Budgetary Plan |
| Updated | Updated |
| at 3.07pm GMT | at 3.07pm GMT |
| 2.57pm GMT | 2.57pm GMT |
| 14:57 | 14:57 |
| We mentioned earlier that the European Commission was meeting to discuss Portugal’s anti-austerity budget, and could reject it. Well, perhaps not entirely. | We mentioned earlier that the European Commission was meeting to discuss Portugal’s anti-austerity budget, and could reject it. Well, perhaps not entirely. |
| #Portugal #OE2016 revised draft budget to be graded as 'partially compliant' by @EU_Commission. /via @diarioeconomico | #Portugal #OE2016 revised draft budget to be graded as 'partially compliant' by @EU_Commission. /via @diarioeconomico |
| Updated | Updated |
| at 3.06pm GMT | at 3.06pm GMT |
| 2.48pm GMT | 2.48pm GMT |
| 14:48 | 14:48 |
| The non-farm figures, although the headline number was lower than expected, still suggest further US rate rises this year, according to UniCredit chief economist Harm Bandholz: | The non-farm figures, although the headline number was lower than expected, still suggest further US rate rises this year, according to UniCredit chief economist Harm Bandholz: |
| The [jobs] report unequivocally supports the Federal Reserve’s (and our) baseline view that further gradual rate hikes are warranted. After all, ongoing labor market dynamics are the main driver of consumer spending, which in turn is the main driver of economic growth in the US. | The [jobs] report unequivocally supports the Federal Reserve’s (and our) baseline view that further gradual rate hikes are warranted. After all, ongoing labor market dynamics are the main driver of consumer spending, which in turn is the main driver of economic growth in the US. |
| A falling unemployment rate and faster wage gains also mean that the Fed is getting closer to meet both of its mandates. That said, many Fed officials have in recent weeks highlighted the unusual uncertainty about the outlook, and stressed that they need to see evidence that global headwinds and tighter financial conditions do not affect the US economy. So while this report is undoubtedly a step in the right direction, the FOMC wants to see more of these signs before pulling the trigger again. | A falling unemployment rate and faster wage gains also mean that the Fed is getting closer to meet both of its mandates. That said, many Fed officials have in recent weeks highlighted the unusual uncertainty about the outlook, and stressed that they need to see evidence that global headwinds and tighter financial conditions do not affect the US economy. So while this report is undoubtedly a step in the right direction, the FOMC wants to see more of these signs before pulling the trigger again. |
| And here are the odds on a hike: | And here are the odds on a hike: |
| March rate hike odds: - Before: 10%- After: 12%But now at least one rate hike in 2016 pic.twitter.com/p54XoTQDyP | March rate hike odds: - Before: 10%- After: 12%But now at least one rate hike in 2016 pic.twitter.com/p54XoTQDyP |
| 2.42pm GMT | 2.42pm GMT |
| 14:42 | 14:42 |
| Wall Street opens lower | Wall Street opens lower |
| Following the mixed US employment figures, the US market is slipping back in early trading. | Following the mixed US employment figures, the US market is slipping back in early trading. |
| The Dow Jones Industrial Average is down around 30 points or 0.16% while the S&P slipped 0.2% and the Nasdaq fell 0.4% at the open. | The Dow Jones Industrial Average is down around 30 points or 0.16% while the S&P slipped 0.2% and the Nasdaq fell 0.4% at the open. |
| European markets are off their best levels, with the FTSE 100 now up just 7 points after earlier climbing nearly 50 points. Germany’s Dax and France’s Cac are also up just 20 and 14 points respectively. | European markets are off their best levels, with the FTSE 100 now up just 7 points after earlier climbing nearly 50 points. Germany’s Dax and France’s Cac are also up just 20 and 14 points respectively. |
| Brent crude has dipped 0.6% to $34.25 a barrel. | Brent crude has dipped 0.6% to $34.25 a barrel. |
| 2.32pm GMT | 2.32pm GMT |
| 14:32 | 14:32 |
| So, fewer US rate cuts this year than previously forecast perhaps. | So, fewer US rate cuts this year than previously forecast perhaps. |
| Barclays on payrolls: "we now expect two rate hikes this year in June and December, as opposed to three in our previous baseline." | Barclays on payrolls: "we now expect two rate hikes this year in June and December, as opposed to three in our previous baseline." |
| 2.27pm GMT | 2.27pm GMT |
| 14:27 | 14:27 |
| "No joy in jobs report" | "No joy in jobs report" |
| More reaction to the non-farm numbers. And here’s a gloomy one from Gary Chaison, Professor of Industrial Relations at Clark University: | More reaction to the non-farm numbers. And here’s a gloomy one from Gary Chaison, Professor of Industrial Relations at Clark University: |
| There is no joy in this month’s jobs report and no sign that things have turned around. The recovery isn’t happening, it isn’t expanding and the labor participation rate is holding. While wages are up a bit, it isn’t enough to make an impact. A lot of workers have substituted good jobs for poor jobs or aren’t working at all which is why the labor participating rate continues to hold. I think the real problem is a lack of consumer confidence that we’re going to come out of this, the economy can recover or we can fall back into a recession. For the huge recession we had, we should be seeing a huge recovery and this is impacting the voters and public in general. | There is no joy in this month’s jobs report and no sign that things have turned around. The recovery isn’t happening, it isn’t expanding and the labor participation rate is holding. While wages are up a bit, it isn’t enough to make an impact. A lot of workers have substituted good jobs for poor jobs or aren’t working at all which is why the labor participating rate continues to hold. I think the real problem is a lack of consumer confidence that we’re going to come out of this, the economy can recover or we can fall back into a recession. For the huge recession we had, we should be seeing a huge recovery and this is impacting the voters and public in general. |
| 2.23pm GMT | 2.23pm GMT |
| 14:23 | 14:23 |
| Chris Williamson, chief economist at Markit, said: | Chris Williamson, chief economist at Markit, said: |
| Signs of a slowdown in hiring, still-weak annual pay growth and disappointing survey data, all pitched alongside an adverse financial market environment so far this year, reduce the odds of the Fed hiking rates again in March. | Signs of a slowdown in hiring, still-weak annual pay growth and disappointing survey data, all pitched alongside an adverse financial market environment so far this year, reduce the odds of the Fed hiking rates again in March. |
| “The unemployment rate fell to an eight-year low of 4.9% as the economy added 151,000 jobs in January, according to official estimates, signalling a marked slowing in the rate of job creation after the surge seen late last year. However, this is still a robust rate of employment growth, and a trend strong enough to keep bringing unemployment down. Furthermore, December’s numbers had in part reflected stronger than usual construction sector hiring due to unseasonably warm weather... | “The unemployment rate fell to an eight-year low of 4.9% as the economy added 151,000 jobs in January, according to official estimates, signalling a marked slowing in the rate of job creation after the surge seen late last year. However, this is still a robust rate of employment growth, and a trend strong enough to keep bringing unemployment down. Furthermore, December’s numbers had in part reflected stronger than usual construction sector hiring due to unseasonably warm weather... |
| It would therefore not be surprising if Fed policymakers decided to await clear signs of an upturn in the economic data flow and easing of financial conditions before committing to more tightening. | It would therefore not be surprising if Fed policymakers decided to await clear signs of an upturn in the economic data flow and easing of financial conditions before committing to more tightening. |
| 2.11pm GMT | 2.11pm GMT |
| 14:11 | 14:11 |
| Non-Farm Reaction: It's OK really | Non-Farm Reaction: It's OK really |
| Some commentators have concluded January’s Non-Farm Payroll was good, apart from the bad bits. Others reckon it was a bad report, apart from the good bits. | Some commentators have concluded January’s Non-Farm Payroll was good, apart from the bad bits. Others reckon it was a bad report, apart from the good bits. |
| So on balance, it’s probably OK. | So on balance, it’s probably OK. |
| DB Ruskin: "marginal disappointments on the headline payroll, but stronger than expected breakdown in almost all the main details" | DB Ruskin: "marginal disappointments on the headline payroll, but stronger than expected breakdown in almost all the main details" |
| Headline aside, this was a *good* US jobs report. | Headline aside, this was a *good* US jobs report. |
| NFP jobs misses at 151kBad news could be bullish for stocks ... if peeps think it delays further hikes | NFP jobs misses at 151kBad news could be bullish for stocks ... if peeps think it delays further hikes |
| Wage gains in NFP are good, so its not really bad data | Wage gains in NFP are good, so its not really bad data |
| Interestingly, for all the sturm und drang about industrial sector weakness, manufacturing employment was a nice +29k in January. | Interestingly, for all the sturm und drang about industrial sector weakness, manufacturing employment was a nice +29k in January. |
| 2.02pm GMT | 2.02pm GMT |
| 14:02 | 14:02 |
| There are around 6 million Americans stuck in part-time jobs who want to work full time, down from around 6.8 million a year ago. | |
| Today’s report says: | Today’s report says: |
| These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. | These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. |
| And that’s despite a steady-pickup in full-time job creation since 2011. | And that’s despite a steady-pickup in full-time job creation since 2011. |
| Your monthly reminder: Virtually all the employment gains in the recovery have been full-time. pic.twitter.com/0VSSbrtQMH | Your monthly reminder: Virtually all the employment gains in the recovery have been full-time. pic.twitter.com/0VSSbrtQMH |
| Updated | |
| at 3.46pm GMT | |
| 1.51pm GMT | 1.51pm GMT |
| 13:51 | 13:51 |
| Mixed but not too bad, is the verdict of Rob Carnell at ING on the non-farm numbers, with a March rise in US interest rates now very unlikely: | Mixed but not too bad, is the verdict of Rob Carnell at ING on the non-farm numbers, with a March rise in US interest rates now very unlikely: |
| The January labour market survey was very mixed, though the headline payrolls figure was on the soft side, at only 151,000, with downward revisions to the previous months data (262,000 down from 292,000). | The January labour market survey was very mixed, though the headline payrolls figure was on the soft side, at only 151,000, with downward revisions to the previous months data (262,000 down from 292,000). |
| But aside from this, the report wasn’t all that bad. The household survey registered an eye-popping and rather improbable 615,000 increase, which added to the 485,000 gain in December suggests more than 1.1 million jobs were created in the last two months. That takes some swallowing, but helped to push the unemployment rate down a further notch to 4.9%. | But aside from this, the report wasn’t all that bad. The household survey registered an eye-popping and rather improbable 615,000 increase, which added to the 485,000 gain in December suggests more than 1.1 million jobs were created in the last two months. That takes some swallowing, but helped to push the unemployment rate down a further notch to 4.9%. |
| But adding to the sense that this is a mixed, rather than bad reading, both hours worked and average earnings also came in on the stronger side, with some upwards revisions on the wages side. | But adding to the sense that this is a mixed, rather than bad reading, both hours worked and average earnings also came in on the stronger side, with some upwards revisions on the wages side. |
| It is difficult to see exactly what the Fed will make of this. But with global financial conditions tightening, this release says “more data needed” before drawing any firm conclusions about any shift in Fed policy. That does at least suggest that a March hike remains off the table. And hopefully by then, we will have a better idea of whether things are really slowing, with no further hikes possible, or whether recent data were just a soft patch and the Fed can resume tightening later in the year. | It is difficult to see exactly what the Fed will make of this. But with global financial conditions tightening, this release says “more data needed” before drawing any firm conclusions about any shift in Fed policy. That does at least suggest that a March hike remains off the table. And hopefully by then, we will have a better idea of whether things are really slowing, with no further hikes possible, or whether recent data were just a soft patch and the Fed can resume tightening later in the year. |
| 1.49pm GMT | 1.49pm GMT |
| 13:49 | 13:49 |
| Several industries took on more staff last month, says the Bureau of Labour Statistics. | Several industries took on more staff last month, says the Bureau of Labour Statistics. |
| Here’s a breakdown of where new jobs were created in January: | Here’s a breakdown of where new jobs were created in January: |
| But, employment declined in private educational services, transportation and warehousing, and mining. | But, employment declined in private educational services, transportation and warehousing, and mining. |
| The Non-farm Payroll is online here. | The Non-farm Payroll is online here. |
| 1.48pm GMT | 1.48pm GMT |
| 13:48 | 13:48 |
| US futures - which before the non-farm figures were predicting a 19 point gain on the Dow Jones Industrial Average - are now suggesting a 65 point decline when the market opens. | US futures - which before the non-farm figures were predicting a 19 point gain on the Dow Jones Industrial Average - are now suggesting a 65 point decline when the market opens. |
| 1.47pm GMT | 1.47pm GMT |
| 13:47 | 13:47 |
| These latest non-farm payroll numbers are another set of poor data since the US Federal Reserve raised interest rates in December, says Dennis de Jong, managing director at UFX.com: | These latest non-farm payroll numbers are another set of poor data since the US Federal Reserve raised interest rates in December, says Dennis de Jong, managing director at UFX.com: |
| However confident Janet Yellen and her Fed colleagues were when raising interest rates in December, the US data released in January must be giving them food for thought – and today’s poor non-farm payroll figures are no different. | However confident Janet Yellen and her Fed colleagues were when raising interest rates in December, the US data released in January must be giving them food for thought – and today’s poor non-farm payroll figures are no different. |
| Adding less than 200 thousand jobs for the first time since October, coupled with lower than expected GDP and productivity figures, has taken some of the shine off of the previously buoyant US economy. | Adding less than 200 thousand jobs for the first time since October, coupled with lower than expected GDP and productivity figures, has taken some of the shine off of the previously buoyant US economy. |
| Yellen won’t be worrying too much just yet, as other major economies have pared down growth forecasts amid global volatility. Many observers will surely be adopting a wait and see approach. | Yellen won’t be worrying too much just yet, as other major economies have pared down growth forecasts amid global volatility. Many observers will surely be adopting a wait and see approach. |
| 1.43pm GMT | 1.43pm GMT |
| 13:43 | 13:43 |
| Josh Raymond, director at London-based broker XTB, sums it up: It’s a mixed bag. | Josh Raymond, director at London-based broker XTB, sums it up: It’s a mixed bag. |
| Completely mixed bag for US jobs. Payrolls weaker and Dec jobs revised lower but jobless rate falls and average earnings higher. #USD rises | Completely mixed bag for US jobs. Payrolls weaker and Dec jobs revised lower but jobless rate falls and average earnings higher. #USD rises |
| 1.42pm GMT | 1.42pm GMT |
| 13:42 | 13:42 |
| #NFP caused #stocks to show a negative initial reaction, while #USD was mixed - initially down, then up and now back to where it was #FX ^FR | #NFP caused #stocks to show a negative initial reaction, while #USD was mixed - initially down, then up and now back to where it was #FX ^FR |
| 1.40pm GMT | 1.40pm GMT |
| 13:40 | 13:40 |
| The dollar is fluctuating wildly as traders (and their algorithms) try to decide if this is a good jobs report, or a bad one. | The dollar is fluctuating wildly as traders (and their algorithms) try to decide if this is a good jobs report, or a bad one. |
| EURUSD's reaction to #NFP: "Uuugly, I'm outta here -- oh wait, look at these earnings, oh and participation!" pic.twitter.com/c9R1wMja4k | EURUSD's reaction to #NFP: "Uuugly, I'm outta here -- oh wait, look at these earnings, oh and participation!" pic.twitter.com/c9R1wMja4k |
| 1.38pm GMT | 1.38pm GMT |
| 13:38 | 13:38 |
| Here’s the unemployment rate: | Here’s the unemployment rate: |
| Updated | Updated |
| at 1.39pm GMT | at 1.39pm GMT |