This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
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
The article has changed 15 times. There is an RSS feed of changes available.
| Version 7 | Version 8 |
|---|---|
| Shock US jobs report as payrolls growth lowest for more than 5 years - business live | |
| (35 minutes later) | |
| 2.55pm BST | |
| 14:55 | |
| Joey Lake, US analyst at the Economist Intelligence Unit, said: | |
| The jobs report was bad, bad, bad: there is no positive spin to it. Not only was May a particularly weak month, the worst in almost six years, but revisions dragged previous months lower. The unemployment rate declined to 4.7% but that is because of a fall in the labour force participation rate: not what we want to see happening. Overall, the job market has added an average of 116,000 jobs/month over the past three months, a substantial slowdown from the 229,000/month averaged in 2015. | |
| What is the reason? The Verizon strike certainly weighed on the May numbers, so we can expect a bounce back in June. And as the US approaches full employment, the rate of job creation was always going to slow. This does not seem to be indicative of a broader economic slowdown: in April consumer spending rose by 1%, the largest monthly increase since 2009. | |
| The labour market slowdown will make the Federal Reserve reconsider its next move. It reduces the chance of a June rate increase and makes it more likely the Fed will wait until July, after the Brexit vote, which will also reduce the political risk from abroad. | |
| 2.54pm BST | |
| 14:54 | |
| More reaction to the disappointing jobs figures. | |
| CEBR added its voice to those suggesting a US rate rise in June was now off the table: | |
| [The report] does support our assessment that now is still too early for another rise. The main factor slowing down growth in the US is exports, which is precisely where the impact of tightening will fall most heavily in the form of a stronger dollar. Fed officials have explicitly highlighted a potential Brexit as another downside risk likely to stay its hand in June. This comes on top of a still fragile global economic environment. Today’s news suggests there may be more to worry about than thought. A good year economically is thought to favour incumbent governments; the risk of a protectionist and isolationist administration by the end of the year is hardly going to give firms the reassurance they need to hire and invest. In the absence of any meaningful inflationary threat, raising interest rates in such an environment would be incomprehensible. | |
| And: | |
| May 27: Yellen says rate hikes in coming months "appropriate"June 3: 38k May payrollsJune 6: Yellen to repeat "appropriate"? Hmmm.... | |
| Bill Gross: Jobs report is big enough shock for Fed to delay rate hike https://t.co/gAoCAv69t1 pic.twitter.com/Is4b61bkYw | |
| And here’s a possible explanation for the shock figures: | |
| Maybe everyone went to go and work on farms. | |
| 2.50pm BST | |
| 14:50 | |
| The weaker than expected US jobs numbers have also sent European markets lower. | |
| Germany’s Dax is now down 0.8% while France’s Cac is 0.78% lower. The FTSE 100 is just managing to stay in positive territory, up 4.5 points. | |
| The dollar has fallen to a two week low on the basis that the figures make a June rate rise unlikely now, despite the previous hints to the contrary from various Fed members. The dollar index dropped by more than 1% while the euro rose 1.3% and sterling hit a three day high of 1.4544. | |
| 2.40pm BST | |
| 14:40 | |
| US markets open lower | |
| Wall Street is down in early trading following those horrible payrolls numbers - the worst in almost six years. | |
| Investors will be weighing up whether it’s plain bad news (weak employment market) or good bad news (US rate hike delayed because of weak employment market). | |
| Updated | |
| at 2.40pm BST | |
| 2.29pm BST | |
| 14:29 | |
| The biggest increase in jobs was in the healthcare sector, with 46,000 jobs added in May, while employment in professional and business services was up by 10,000. | |
| Mining, manufacturing and construction were among the sectors where jobs fell. | |
| Economists said a US rate hike in June - previously considered a strong possibility - was now unlikely because of the unexpectedly weak payrolls. | |
| Paul Ashworth, chief US economist at Capital Economics: | |
| The 38,000 increase in non-farm payrolls in May, which is still only 73,000 if we adjust for the 35,000 striking Verizon workers, means that a June rate hike from the Fed is now very unlikely. | |
| In addition, the gains in the preceding two months were revised down by a cumulative 59,000. A July hike is still possible, but it would require clear evidence of a rebound in June’s payroll figures (and a UK vote to remain in the European Union). | |
| That sound you hear is Fed Chair Janet Yellen furiously re-writing her speech that she is scheduled to give on Monday. | |
| James Smith, economist at ING: | |
| Over recent weeks, the blocks appeared to have been gradually falling into place for another rate hike from the Fed, but the latest labour report has potentially put a large spanner in the works. | |
| In our opinion, this may well put the final nail in the coffin for a June hike, with confirmation of this potentially coming from Chair Yellen’s speech on Monday. | |
| 2.15pm BST | 2.15pm BST |
| 14:15 | 14:15 |
| Donald Trump has given his verdict on the shockingly weak payrolls numbers: | Donald Trump has given his verdict on the shockingly weak payrolls numbers: |
| Terrible jobs report just reported. Only 38,000 jobs added. Bombshell! | Terrible jobs report just reported. Only 38,000 jobs added. Bombshell! |
| 2.12pm BST | 2.12pm BST |
| 14:12 | 14:12 |
| May’s US jobs numbers were always going to be affected by a strike among Verizon workers, but they do not account for such a huge drop in payrolls (to 38k). | May’s US jobs numbers were always going to be affected by a strike among Verizon workers, but they do not account for such a huge drop in payrolls (to 38k). |
| As Jana Kasperkevic from the Guardian’s New York office explains: | As Jana Kasperkevic from the Guardian’s New York office explains: |
| A strike by 40,000 Verizon workers impacted the numbers, the labor department said, and without the strike the number of jobs added would have been 72,000, which is still less than a half of expect job growth. | A strike by 40,000 Verizon workers impacted the numbers, the labor department said, and without the strike the number of jobs added would have been 72,000, which is still less than a half of expect job growth. |
| That ain't Verizon | That ain't Verizon |
| 2.05pm BST | 2.05pm BST |
| 14:05 | 14:05 |
| Looking at the detail of the US jobs numbers, wage growth was in line with expectations at 0.2% in May. | Looking at the detail of the US jobs numbers, wage growth was in line with expectations at 0.2% in May. |
| The unemployment rate eased to 4.7% from 5% in April, although the drop was partly explained by people who stopped looking for work and were therefore no longer classed as unemployed. | The unemployment rate eased to 4.7% from 5% in April, although the drop was partly explained by people who stopped looking for work and were therefore no longer classed as unemployed. |
| From the US Labor Department report: | From the US Labor Department report: |
| In May, 1.7m persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. | In May, 1.7m persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. |
| They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. | They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. |
| Among the marginally attached, there were 538,000 discouraged workers in May, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) | Among the marginally attached, there were 538,000 discouraged workers in May, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) |
| Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. | Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. |
| Manufacturing payrolls fell by 10,000 after rising by a (downwardly revised) 2,000 a month earlier. | Manufacturing payrolls fell by 10,000 after rising by a (downwardly revised) 2,000 a month earlier. |
| 1.49pm BST | 1.49pm BST |
| 13:49 | 13:49 |
| US futures dropped after the shock payrolls figures. | 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. | 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. | Here is the full story from our US team. |
| 1.43pm BST | 1.43pm BST |
| 13:43 | 13:43 |
| This is a huge miss on US jobs, as companies dramatically slowed their hiring in May. | 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. | 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... | 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 | 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 | 1.32pm BST |
| 13:32 | 13:32 |
| US payrolls sharply lower than expected | US payrolls sharply lower than expected |
| Breaking: US non-farm payrolls have come in way below expectations. | 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. | 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. | April’s number has been revised down too - to 123,000 from an earlier estimate of 160,000. |
| More soon.... | More soon.... |
| Updated | Updated |
| at 1.32pm BST | at 1.32pm BST |
| 12.40pm BST | 12.40pm BST |
| 12:40 | 12:40 |
| 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 BST | 12.20pm BST |
| 12:20 | 12:20 |
| 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 BST | 12.16pm BST |
| 12:16 | 12:16 |
| 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 BST | 12.10pm BST |
| 12:10 | 12:10 |
| 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 BST | 11.43am BST |
| 11:43 | 11:43 |
| 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. |
| Updated | Updated |
| at 12.00pm BST | at 12.00pm BST |
| 11.27am BST | 11.27am BST |
| 11:27 | 11:27 |
| JP Morgan boss: Brexit could mean 4,000 UK job losses | JP 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/wzxHxw3Ksi | BREAKING: 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 BST | 11.09am BST |
| 11:09 | 11:09 |
| 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/6Xsb93yNZj | U.S. interest rates will probably rise twice this year, Charles Evans says https://t.co/sgWfkwF51I https://t.co/6Xsb93yNZj |
| 10.44am BST | 10.44am BST |
| 10:44 | 10:44 |
| 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. |