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Markets rise as investors await US jobs report - business live Shock US jobs report as payrolls come in sharply lower than expected- business live
(35 minutes later)
1.49pm BST
13:49
US futures dropped after the shock payrolls figures.
On the one hand, it makes the prospect of a rate rise at the FOMC’s June meeting less likely. But on the other, it suggests the labour market in the world’s largest economy is weaker than assumed.
Here is the full story from our US team.
1.43pm BST
13:43
This is a huge miss on US jobs, as companies dramatically slowed their hiring in May.
Payrolls rose by just 38,000 in May, the slowest rate of growth since September 2010.
This should get the member’s of the Fed’s rate-setting FOMC scratching their heads...
Eek. This will leave Fed in a pickle. US payrolls up just 38,000 in May, worst growth since sept 2010. pic.twitter.com/MdzCyTETIg
1.32pm BST
13:32
US payrolls sharply lower than expected
Breaking: US non-farm payrolls have come in way below expectations.
There were 38,000 jobs added in May, compared with expectations of a 164,000 increase.
April’s number has been revised down too - to 123,000 from an earlier estimate of 160,000.
More soon....
Updated
at 1.32pm BST
12.40pm BST12.40pm BST
12:4012:40
Earlier, there were some disappointing eurozone retail sales figures.Earlier, there were some disappointing eurozone retail sales figures.
Instead of the expected 0.3% month on month rise in April, sales were flat due to falls in Germany and Belgium in the wake of the Brussels terror attacks. This follows a 0.6% fall in the overall eurozone figure in March.Instead of the expected 0.3% month on month rise in April, sales were flat due to falls in Germany and Belgium in the wake of the Brussels terror attacks. This follows a 0.6% fall in the overall eurozone figure in March.
The year on year rise in April was 1.4%, below forecasts of a 1.9% increase. The figures could point to slower GDP growth in the second quarter, analysts believe.The year on year rise in April was 1.4%, below forecasts of a 1.9% increase. The figures could point to slower GDP growth in the second quarter, analysts believe.
12.20pm BST12.20pm BST
12:2012:20
The rise in the FTSE 100 today means after a volatile few months, the index is more or less back where it began the year.The rise in the FTSE 100 today means after a volatile few months, the index is more or less back where it began the year.
#FTSE100 back at 'pancake performance' year-to-date#FTSE100 back at 'pancake performance' year-to-date
12.16pm BST12.16pm BST
12:1612:16
Connor Campbell, financial analyst at Spreadex, has this take on the markets:Connor Campbell, financial analyst at Spreadex, has this take on the markets:
Having started the day strong a far better than expected services PMI (at 53.5 against the 52.5 forecast) ensured the FTSE continued to grow this Friday, the UK index rising by nearly 1%.Having started the day strong a far better than expected services PMI (at 53.5 against the 52.5 forecast) ensured the FTSE continued to grow this Friday, the UK index rising by nearly 1%.
While not quite as enthusiastic as the FTSE, the Eurozone indices nevertheless pushed forth with a near half a percent rise this Friday despite a fairly dismal morning for data.While not quite as enthusiastic as the FTSE, the Eurozone indices nevertheless pushed forth with a near half a percent rise this Friday despite a fairly dismal morning for data.
Unsurprisingly the Dow Jones couldn’t quite join in with Europe’s rebound this Friday morning, the index’s futures resolute in their flatness ahead of this afternoon’s jobs report.Unsurprisingly the Dow Jones couldn’t quite join in with Europe’s rebound this Friday morning, the index’s futures resolute in their flatness ahead of this afternoon’s jobs report.
With June’s Fed meeting less than a fortnight away today’s non-farm number is arguably the most important since last December.With June’s Fed meeting less than a fortnight away today’s non-farm number is arguably the most important since last December.
12.10pm BST12.10pm BST
12:1012:10
An update on how the other major markets in Europe are doing:An update on how the other major markets in Europe are doing:
11.43am BST11.43am BST
11:4311:43
The FTSE 100 is up 1% or 62 points at 6,248. It is the biggest riser among the major European indices.The FTSE 100 is up 1% or 62 points at 6,248. It is the biggest riser among the major European indices.
Investors are no doubt relieved that the UK services PMI did not deliver a nasty shock, but markets are also being boosted by the resilience of oil prices.Investors are no doubt relieved that the UK services PMI did not deliver a nasty shock, but markets are also being boosted by the resilience of oil prices.
Brent crude is hovering just above $50 a barrel despite the stalemate at Thursday’s Opec meeting in Vienna.Brent crude is hovering just above $50 a barrel despite the stalemate at Thursday’s Opec meeting in Vienna.
In a couple of hours we will have May’s non-farm payroll report from the US, which always has the potential to move markets. Economists polled by Reuters are expecting payrolls to jump by 164,000, following a 160,000 rise in April.In a couple of hours we will have May’s non-farm payroll report from the US, which always has the potential to move markets. Economists polled by Reuters are expecting payrolls to jump by 164,000, following a 160,000 rise in April.
CMC’s Michael Hewson:CMC’s Michael Hewson:
European markets have got off to a positive start ahead of this afternoon’s keenly awaited US jobs data.European markets have got off to a positive start ahead of this afternoon’s keenly awaited US jobs data.
Investors could do with some good news this week given that we’ve seen declines every day this week for the FTSE 100, despite the fact that the oil price looks on course for its fourth successive week of gains, with Brent prices looking to gain a foothold above $50 a barrel.Investors could do with some good news this week given that we’ve seen declines every day this week for the FTSE 100, despite the fact that the oil price looks on course for its fourth successive week of gains, with Brent prices looking to gain a foothold above $50 a barrel.
It is expected that the US economy will have added 160k new jobs in May, while the unemployment rate is expected to drop to 4.9%.It is expected that the US economy will have added 160k new jobs in May, while the unemployment rate is expected to drop to 4.9%.
If the jobs number drops sharply to 130k or anywhere near that - quite possible given the Verizon strikes and the slowdown in manufacturing hiring - then any prospect of a move in rates in June, already seen as fairly low could well diminish further.If the jobs number drops sharply to 130k or anywhere near that - quite possible given the Verizon strikes and the slowdown in manufacturing hiring - then any prospect of a move in rates in June, already seen as fairly low could well diminish further.
UpdatedUpdated
at 12.00pm BSTat 12.00pm BST
11.27am BST11.27am BST
11:2711:27
JP Morgan boss: Brexit could mean 4,000 UK job lossesJP Morgan boss: Brexit could mean 4,000 UK job losses
Jamie Dimon, the chief executive of JP Morgan, is the latest business leader to issue a dire warning on the potential consequences of Brexit.Jamie Dimon, the chief executive of JP Morgan, is the latest business leader to issue a dire warning on the potential consequences of Brexit.
Addressing the bank’s staff in Bournemouth, alongside the chancellor and remain campaigner George Osborne, Dimon said:Addressing the bank’s staff in Bournemouth, alongside the chancellor and remain campaigner George Osborne, Dimon said:
I think it would be a terrible deal for the British economy and jobs.I think it would be a terrible deal for the British economy and jobs.
I don’t know if it means 1,000 jobs [would go at JP Morgan], 2,000 jobs, it could be as many as 4,000 jobs. And they would be jobs all around the UK.I don’t know if it means 1,000 jobs [would go at JP Morgan], 2,000 jobs, it could be as many as 4,000 jobs. And they would be jobs all around the UK.
I don’t want you to worry about it but when you vote you should be thinking about something like this.I don’t want you to worry about it but when you vote you should be thinking about something like this.
BREAKING: JPMorgan may cut "as many as 4,000 jobs" if #Brexit happens, CEO Jamie Dimon says https://t.co/g0F966Xt98 https://t.co/wzxHxw3KsiBREAKING: JPMorgan may cut "as many as 4,000 jobs" if #Brexit happens, CEO Jamie Dimon says https://t.co/g0F966Xt98 https://t.co/wzxHxw3Ksi
11.09am BST11.09am BST
11:0911:09
Charles Evans, president of the Chicago Federal Reserve has been speaking in London about the possible timing of US interest rate hikes.Charles Evans, president of the Chicago Federal Reserve has been speaking in London about the possible timing of US interest rate hikes.
He said there was a “reasonable case” for delaying rate rises until core inflation reaches the Fed’s 2% target.He said there was a “reasonable case” for delaying rate rises until core inflation reaches the Fed’s 2% target.
On current forecasts, that wouldn’t be until 2018.On current forecasts, that wouldn’t be until 2018.
However, Evans said that as things stood, it was likely the Fed would vote for two rate hikes before the end of 2016, taking borrowing costs to a range between 0.75% and 1%.However, Evans said that as things stood, it was likely the Fed would vote for two rate hikes before the end of 2016, taking borrowing costs to a range between 0.75% and 1%.
Speaking at the Global Interdependence Center in London, he said:Speaking at the Global Interdependence Center in London, he said:
Frankly, I’m really of two minds at the moment, and I expect to take this quandary with me into the next FOMC meeting.Frankly, I’m really of two minds at the moment, and I expect to take this quandary with me into the next FOMC meeting.
On the one hand, under the committee’s current approach to renormalizing policy, I think it may be appropriate to have two 25 basis point moves between now and the end of the year.On the one hand, under the committee’s current approach to renormalizing policy, I think it may be appropriate to have two 25 basis point moves between now and the end of the year.
I see the value in making small and gradual adjustments to the fed funds rate as the data improve and confirm my positive baseline outlook for the US. And this is my base-case view of appropriate policy.I see the value in making small and gradual adjustments to the fed funds rate as the data improve and confirm my positive baseline outlook for the US. And this is my base-case view of appropriate policy.
On the other hand, if I think outside of the baseline, I also think that a reasonable case can be made for holding off increasing the funds rate until core inflation actually gets to 2% on a sustainable basis.On the other hand, if I think outside of the baseline, I also think that a reasonable case can be made for holding off increasing the funds rate until core inflation actually gets to 2% on a sustainable basis.
U.S. interest rates will probably rise twice this year, Charles Evans says https://t.co/sgWfkwF51I https://t.co/6Xsb93yNZjU.S. interest rates will probably rise twice this year, Charles Evans says https://t.co/sgWfkwF51I https://t.co/6Xsb93yNZj
10.44am BST10.44am BST
10:4410:44
BHS collapse: Sir Phillip Green accused of 'lamentable behaviour'BHS collapse: Sir Phillip Green accused of 'lamentable behaviour'
In other UK news, Sir Philip Green has received more criticism over BHS - the high street retail chain he sold for £1 last year that has now collapsed with the loss of 11,000 jobs.In other UK news, Sir Philip Green has received more criticism over BHS - the high street retail chain he sold for £1 last year that has now collapsed with the loss of 11,000 jobs.
Simon Walker, the head of the Institute of Directors accused Green of a “lamentable failure of behaviour” that risked “deeply damaging” the British business world as a whole.Simon Walker, the head of the Institute of Directors accused Green of a “lamentable failure of behaviour” that risked “deeply damaging” the British business world as a whole.
He told BBC radio 4:He told BBC radio 4:
Sir Philip Green is a very high-profile business leader. He is the person who is on the front page with Kate Moss on his arm and who has a £100m superyacht and so on.Sir Philip Green is a very high-profile business leader. He is the person who is on the front page with Kate Moss on his arm and who has a £100m superyacht and so on.
When someone like this ends up behaving like this, people think that’s how business is, and it’s not. The majority of business leaders are people who are more likely to have mortgaged their homes to keep their company going than to own this kind of lavish thing.When someone like this ends up behaving like this, people think that’s how business is, and it’s not. The majority of business leaders are people who are more likely to have mortgaged their homes to keep their company going than to own this kind of lavish thing.
Read our full story here.Read our full story here.
Green will face questions by MPs on 15 June over his role in the demise of BHS.Green will face questions by MPs on 15 June over his role in the demise of BHS.
10.24am BST
10:24
Here is the breakdown of how UK services companies felt their businesses were being affected by the looming possibility of Brexit...
10.11am BST
10:11
Markit’s chief economist, Chris Williamson, was not overly cheered by the better-than-expected services PMI number for the UK.
He says that taking into account all the data for the second quarter so far, growth is on course to halve between April and June, following 0.4% growth in the first quarter.
The PMI surveys show that the pace of economic growth remained subdued in May, as Brexit worries exacerbated existing headwinds. The data so far indicate that the second quarter is likely to see the economy grow by just 0.2%.
Growth has collapsed in manufacturing and construction, leaving the economy dependent on the service sector to sustain the upturn, though even here the pace of expansion has remained frustratingly weak so far this year.
The detail of the PMI survey showed that UK services sector companies took on workers at the slowest rate in more than three years.
10.02am BST
10:02
The better-than-expected UK services PMI should come as a relief to investors.
A weaker number for May would have started to build a more worrying picture of how the UK economy is performing in the second quarter.
The big fear is that if Britain votes to leave the EU when it goes to the polls on 23 June, the UK will slide back into recession at a time when the economy is not fully healed following the last crisis.
In May’s PMI, Markit asked UK services companies an additional question:
“Please state the extent to which the issue of the UK’s potential exit from the EU is currently affecting your business.”
Of those taking part in the survey, 28% said a potential Brexit was having a detrimental impact on business, while 9% said it was having a strongly detrimental impact.
On the flip side, 51% said it was having no significant effect.
9.33am BST
09:33
UK services sector grows in May
Breaking: The UK services sector grew at a faster rate than expected in May.
The headline index on the Markit/CIPS PMI increased to 53.5 from 52.3 in April. Economists were expecting a smaller rise to 52.5. Anything above 50 indicates expansion.
9.29am BST
09:29
So Italy let the side down on an otherwise positive set of services PMIs for the eurozone.
Chris Williamson, chief economist at Markit, said combined with the manufacturing surveys published earlier in the week, the latest PMIs suggested the eurozone economy was moving along at a sluggish pace.
He suggested the growth of 0.5% achieved in the first quarter would not be sustained into the second:
The final PMI numbers for May have come in slightly ahead of the earlier flash readings, but still point a eurozone economy which seems unable to move out of low gear.
The survey data are signalling a GDP rise of 0.3% in the second quarter, suggesting the growth spurt seen at the start of the year will prove frustratingly short-lived.
9.19am BST
09:19
Eurozone services sector grows
The eurozone’s services sector expanded at the fastest rate in three months in May, boosted by growth in Germany, France, Spain and Ireland.
The headline index measuring activity on the Markit PMI survey edged up to 53.3 last month from 53.1 in April.
Employment in the eurozone’s services industry increased for a nineteenth month, with jobs created at the fastest rate in Germany and Ireland.
Italy’s services sector fared less well than its neighbours in the single currency bloc, with the headline index pointing to a contraction in activity in May.
8.54am BST
08:54
European markets open higher
All major indices are higher this morning after Wall Street closed up last night.
Investors are holding their nerve so far. There were no nasty shocks on Thursday from the European Central Bank’s meeting of the governing council in Vienna, where all policy measures were left on hold.
8.35am BST
08:35
Spanish services sector shows strength
Activity in Spain’s services sector grew at an accelerated pace in May according to the Markit PMI survey.
The headline index increased to 55.4 from 55.1 in April. It was better than the 53.5 forecast by economists, and will no doubt be a source of relief for investors following weaker manufacturing numbers earlier in the week.
Andrew Harker, senior economist at Markit and author of the PMI report, said:
Following on from Wednesday’s disappointing Spain manufacturing PMI numbers, the latest services data are something of a relief, with growth in activity and new business ticking up slightly.
The figures provide hope that the sector will be able to successfully weather headwinds such as a weak global environment and domestic political instability and remain in growth territory in the near-term at least.
8.23am BST
08:23
Oil prices hover above $50
Brent crude oil has edged higher this morning, up 0.3% at $50.2 a barrel.
It appears that a stalemate at Opec’s meeting in Vienna on Thursday - where Tehran refused to support a plan by Riyadh and others to freeze their crude output - has been partially offset by the latest US stockpiles data.
US crude stockpiles fell 1.4m barrels last week, reducing supplies for a second week according to the figures from the Energy Information Administration.
7.58am BST
07:58
The Agenda: services PMIs and US payrolls
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s all eyes on the service sector this morning as the PMI reports for May are published for the UK and the eurozone.
In the UK, the Markit/CIPS report will be closely watched by investors looking for clues on how the wider economy is doing in the second quarter.
Economists are predicting the monthly survey will paint a stable picture of the the sector, which accounts for more than three quarters of the UK economy.
The headline index is predicted to rise to edge up to 52.5 in May from 52.3 in April, where anything above 50 signals an expansion in activity.
If the number comes in below that, investor nerves - already shot in the run up to the EU referendum - are likely to rise.
As Michael Hewson chief market analyst at CMC Markets, puts it:
We’ll get further colour on whether the UK economy has hit a partially self-inflicted slump brought about by all the hysteria surrounding the upcoming referendum vote.
A poor number here could well raise concerns about a potential negative quarter for the UK economy, in the process increasing speculation about a possible rate cut by the Bank of England.
What was that about a possible DIY recession?
Also coming up.....
We will get the eurozone services PMIs, and this afternoon the closely watched non-farm payrolls report will be published in the US.
Will the jobs report make the Fed more likely or less likely to raise US interest rates in the near future? We will bring you all the reaction.
Updated
at 8.02am BST