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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jun/03/markets-await-services-data-for-clues-on-uk-economy-business-live
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| Shock US jobs report as payrolls growth lowest for more than 5 years - as it happened | |
| (35 minutes later) | |
| 6.05pm BST | |
| 18:05 | |
| Fed should be cautious on rate hike, says central bank's Brainard | |
| The poor US jobs figures only add to the concerns about the country’s economy, which may still be too weak for a rate rise. | |
| That is the view expressed by Federal Reserve governor Lael Brainard in a speech in Washington. She said the non-farm payroll numbers suggested that the US labour market had slowed, and added that any rate rise should also wait until it was clearer that China and Europe are doing better, and the UK’s referendum on EU membership was out of the way. She said: | |
| Recognising the data we have on hand for the second quarter is quite mixed and still limited, and there is important near-term uncertainty, there would appear to be an advantage to waiting until developments provide greater confidence. | |
| Prudent risk-management would suggest the risks from waiting until the totality of the data provides greater confidence in a rebound in domestic activity, and there is greater certainty regarding the “Brexit” vote, seem lower than the risks associated with moving ahead of these developments. | |
| Fed's Brainard: Risk management suggests waiting to raise rates https://t.co/BisoPWQaNI | |
| On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back next week. | |
| 6.05pm BST | |
| 18:05 | |
| US energy companies added 9 oil rigs last week, bringing the total rig count up to 325 according to the latest Baker Hughes report. This is only the second time this year the rig count has gone up, and then it was only one rig in the middle of March. It comes as oil hit $50 a barrel despite this week’s Opec meeting failing to agree an output ceiling. | |
| The number of gas rigs fell however, making a total increase of four rigs: | |
| US Baker Hughes Rig Count (Jun 3) 408, previous 404Oil Rigs 325, previous 316Gas Rigs 82, previous 87 | |
| Updated | |
| at 6.07pm BST | |
| 5.43pm BST | 5.43pm BST |
| 17:43 | 17:43 |
| European shares rattled by poor US jobs numbers | European shares rattled by poor US jobs numbers |
| The disappointing non-farm payroll numbers gave a shock to investors who were expecting a calm end to the week, sending stock markets sharply lower, hitting the dollar and prompting a spate of bond buying. | The disappointing non-farm payroll numbers gave a shock to investors who were expecting a calm end to the week, sending stock markets sharply lower, hitting the dollar and prompting a spate of bond buying. |
| There was a two way pull between those who saw the job figures as positive, in that they would prevent the US Federal Reserve from raising interest rates this month, and those who worried about the signs of a weak US economy. By the close of trade in Europe, the former had regained some ground and markets recovered from their worst levels. Indeed UK shares, supported by rises in commodity companies as oil held fairly steady during the day, managed to end up in positive territory. The final scores showed: | There was a two way pull between those who saw the job figures as positive, in that they would prevent the US Federal Reserve from raising interest rates this month, and those who worried about the signs of a weak US economy. By the close of trade in Europe, the former had regained some ground and markets recovered from their worst levels. Indeed UK shares, supported by rises in commodity companies as oil held fairly steady during the day, managed to end up in positive territory. The final scores showed: |
| On Wall Street, the Dow Jones Industrial Average is currently down just 39 points or 0.23%. | On Wall Street, the Dow Jones Industrial Average is currently down just 39 points or 0.23%. |
| 5.23pm BST | 5.23pm BST |
| 17:23 | 17:23 |
| Back with the US jobs: | Back with the US jobs: |
| Probability of June rate hike:Pre-jobs report: 20.6%Post-jobs report: 5.6%h/t @andrewflowershttps://t.co/ow3BvzfseF | Probability of June rate hike:Pre-jobs report: 20.6%Post-jobs report: 5.6%h/t @andrewflowershttps://t.co/ow3BvzfseF |
| 4.37pm BST | 4.37pm BST |
| 16:37 | 16:37 |
| Friday rating agency update: | Friday rating agency update: |
| S&P: Ireland 'A+/A-1' Ratings Affirmed; Outlook Stable | S&P: Ireland 'A+/A-1' Ratings Affirmed; Outlook Stable |
| S&P said: | S&P said: |
| We expect the new minority government in Ireland to keep pursuing open and proactive economic policies and continue fiscal consolidation. Thanks to rapid nominal GDP growth, we expect net general government debt to decline to below 80% of GDP in 2017. | We expect the new minority government in Ireland to keep pursuing open and proactive economic policies and continue fiscal consolidation. Thanks to rapid nominal GDP growth, we expect net general government debt to decline to below 80% of GDP in 2017. |
| We are therefore affirming our ‘A+/A-1’ sovereign credit ratings on Ireland. The stable outlook balances our view of upside potential for the ratings if Ireland’s fiscal position continues to improve against risks associated with external factors such as a potential Brexit, or weaker global demand. | We are therefore affirming our ‘A+/A-1’ sovereign credit ratings on Ireland. The stable outlook balances our view of upside potential for the ratings if Ireland’s fiscal position continues to improve against risks associated with external factors such as a potential Brexit, or weaker global demand. |
| Updated | Updated |
| at 4.44pm BST | at 4.44pm BST |
| 4.30pm BST | 4.30pm BST |
| 16:30 | 16:30 |
| Bond prices rose and yields fell as investors looked for havens after the shock US jobs numbers. | Bond prices rose and yields fell as investors looked for havens after the shock US jobs numbers. |
| In the UK, 30 year yields fell to 2.084% after the US data, the lowest level since February 2015. Germany’s 10 year Bund yield fell to 0.073%, its lowest this year. | In the UK, 30 year yields fell to 2.084% after the US data, the lowest level since February 2015. Germany’s 10 year Bund yield fell to 0.073%, its lowest this year. |
| 4.12pm BST | 4.12pm BST |
| 16:12 | 16:12 |
| The poor jobs numbers following various hawkish comments from US Federal Reserve members make chair Janet Yellen’s speech on Monday evening a potentially tricky affair. David Morrison, senior market strategist at Spread Co, said: | The poor jobs numbers following various hawkish comments from US Federal Reserve members make chair Janet Yellen’s speech on Monday evening a potentially tricky affair. David Morrison, senior market strategist at Spread Co, said: |
| Over the last month it became apparent that the US Federal Reserve was unhappy that the market refused to price in the prospect of a summer rate hike. Consequently, over the past few weeks we saw a confusion of Fed Heads come out to declare that their conditions for monetary tightening were being met. Some were claiming that two, three or even four rate hikes were possible in 2016 – a ludicrous proposition given the few windows available due to the US Presidential Election, let alone the uncertain outlook for the US and global economies. | Over the last month it became apparent that the US Federal Reserve was unhappy that the market refused to price in the prospect of a summer rate hike. Consequently, over the past few weeks we saw a confusion of Fed Heads come out to declare that their conditions for monetary tightening were being met. Some were claiming that two, three or even four rate hikes were possible in 2016 – a ludicrous proposition given the few windows available due to the US Presidential Election, let alone the uncertain outlook for the US and global economies. |
| This constant barrage of hawkishness pressed the markets to sharply cut the odds on a summer rate hike. This led to a rally in the dollar together with a nasty and protracted sell-off in precious metals. That’s all been reversed now thanks to today’s payroll release. | This constant barrage of hawkishness pressed the markets to sharply cut the odds on a summer rate hike. This led to a rally in the dollar together with a nasty and protracted sell-off in precious metals. That’s all been reversed now thanks to today’s payroll release. |
| On Monday evening (17:30BST) Yellen is scheduled to speak about the economic outlook and monetary policy. It will be very interesting to hear what she has to say in the light of the jobs data. We can’t blame the Fed for weak data. But we can take them to task for their relentless effort to tell the market it was pricing financial assets incorrectly. The US Federal Reserve exerts too much influence over the markets these days and many investors will now believe that the Fed has taken them for a ride. Yellen is going to find it very difficult to winch back credibility for the central bank now. | On Monday evening (17:30BST) Yellen is scheduled to speak about the economic outlook and monetary policy. It will be very interesting to hear what she has to say in the light of the jobs data. We can’t blame the Fed for weak data. But we can take them to task for their relentless effort to tell the market it was pricing financial assets incorrectly. The US Federal Reserve exerts too much influence over the markets these days and many investors will now believe that the Fed has taken them for a ride. Yellen is going to find it very difficult to winch back credibility for the central bank now. |
| 3.59pm BST | 3.59pm BST |
| 15:59 | 15:59 |
| A week ago Federal Reserve chair Janet Yellen was at Harvard suggesting a summer interest rate rise could on the cards. Now, after the poor jobs figures, maybe not: | A week ago Federal Reserve chair Janet Yellen was at Harvard suggesting a summer interest rate rise could on the cards. Now, after the poor jobs figures, maybe not: |
| Window to hike is now closed: "Fed May Go in Sept.; June Seems Off Table, July Too Soon" BofAML | Window to hike is now closed: "Fed May Go in Sept.; June Seems Off Table, July Too Soon" BofAML |
| 3.47pm BST | 3.47pm BST |
| 15:47 | 15:47 |
| US #PMI surveys point to #GDP growing at an annualised rate of just 0.7-8% in Q2 https://t.co/JjIvanBgPW pic.twitter.com/j79xvTJIeP | US #PMI surveys point to #GDP growing at an annualised rate of just 0.7-8% in Q2 https://t.co/JjIvanBgPW pic.twitter.com/j79xvTJIeP |
| 3.35pm BST | 3.35pm BST |
| 15:35 | 15:35 |
| The disappointing US services sector data which followed quickly on from the poor jobs numbers provides another reason for the Federal Reserve to leave rates unchanged this month, says James Smith at ING Bank: | The disappointing US services sector data which followed quickly on from the poor jobs numbers provides another reason for the Federal Reserve to leave rates unchanged this month, says James Smith at ING Bank: |
| After May’s non-farm payrolls plummeted, the ISM Non-manufacturing came crashing back down to 52.9 from 55.7, much lower than expected. Aside from supplier deliveries, the other main components that contribute to the headline recorded fairly sizable falls (employment and business activity), particularly new orders, where the size of the month-on-month drop was the largest since November 2008. This is especially concerning, given that in theory it sets the precedent for (or “leads”) future business activity. | After May’s non-farm payrolls plummeted, the ISM Non-manufacturing came crashing back down to 52.9 from 55.7, much lower than expected. Aside from supplier deliveries, the other main components that contribute to the headline recorded fairly sizable falls (employment and business activity), particularly new orders, where the size of the month-on-month drop was the largest since November 2008. This is especially concerning, given that in theory it sets the precedent for (or “leads”) future business activity. |
| Although the ISM surveys are perhaps not the most central part of the Federal Reserve Open Market Committee reaction function, the magnitude of the fall means that it will probably feature in the debate over near-term policy. Indeed, given that the US recession story has faded away over recent weeks, it is possible that the combination of today’s weak non-farm payrolls figure and the drop in the ISM Non-manufacturing prompts the debate to resurface to some degree over coming weeks. Either way, it is another reason for the FOMC to leave rates unchanged in June, with focus now on Chair Yellen’s speech on Monday to see how the latest data will affect policy in coming months. | Although the ISM surveys are perhaps not the most central part of the Federal Reserve Open Market Committee reaction function, the magnitude of the fall means that it will probably feature in the debate over near-term policy. Indeed, given that the US recession story has faded away over recent weeks, it is possible that the combination of today’s weak non-farm payrolls figure and the drop in the ISM Non-manufacturing prompts the debate to resurface to some degree over coming weeks. Either way, it is another reason for the FOMC to leave rates unchanged in June, with focus now on Chair Yellen’s speech on Monday to see how the latest data will affect policy in coming months. |
| 3.11pm BST | 3.11pm BST |
| 15:11 | 15:11 |
| Still, US factory orders were more or less in line with expectations: | Still, US factory orders were more or less in line with expectations: |
| US Factory Orders Data (Apr)Factory Orders M/M +1.9% v +1.9% exp, prev +1.1% rev +1.7%Ex Transportation M/M +0.5%, prev +0.8% rev +1.0% | US Factory Orders Data (Apr)Factory Orders M/M +1.9% v +1.9% exp, prev +1.1% rev +1.7%Ex Transportation M/M +0.5%, prev +0.8% rev +1.0% |
| Updated | Updated |
| at 3.11pm BST | at 3.11pm BST |
| 3.07pm BST | 3.07pm BST |
| 15:07 | 15:07 |
| US service sector growth slows | US service sector growth slows |
| More signs of weakness in the US economy, this time from two surveys of the service sector. | More signs of weakness in the US economy, this time from two surveys of the service sector. |
| First the ISM non-manufacturing PMI fell from 55.7 in April to 52.9, well below the consensus forecast of 55.5. The new orders index at 54.2, down from 59.9, was the lowest since February 2014. | First the ISM non-manufacturing PMI fell from 55.7 in April to 52.9, well below the consensus forecast of 55.5. The new orders index at 54.2, down from 59.9, was the lowest since February 2014. |
| And the final reading of the Markit services PMI for May came in at 51.3, down from 52.8 in April. The index is marginally higher that the first estimate of 51.2 for May. | And the final reading of the Markit services PMI for May came in at 51.3, down from 52.8 in April. The index is marginally higher that the first estimate of 51.2 for May. |
| Meanwhile the Markit composite index - manufacturing and services - fell from 52.4 in April to 50.9. | Meanwhile the Markit composite index - manufacturing and services - fell from 52.4 in April to 50.9. |