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US non-farm payrolls disappoint in September with fewer jobs added - business live US non-farm payrolls disappoint in September with fewer jobs added - business live
(35 minutes later)
2.53pm BST
14:53
US markets are slightly down in early trading:
2.43pm BST
14:43
I’ve announced that the sale of the public’s stake in Lloyds will restart shortly https://t.co/oWV2HJxitu
Returning Lloyds to the private sector is the right thing to do & our plan will get back all the cash taxpayers invested in it.
2.40pm BST
14:40
Government announces Lloyds sell-off
While the non-farms were being published in the US, the UK government announced it is going to sell its remaining 9.1% stake in Lloyds Banking Group directly into the stock market.
This means it is abandoning George Osborne’s plan to offer the public cut price shares.
From Washington, the chancellor, Philip Hammond, said:
Returning Lloyds to the private sector is in the interests of the bank, taxpayers and the country as a whole. That is why exiting our stake in Lloyds in an orderly way and at the best possible price is one of my top priorities as chancellor.
I have listened to the experts. Ongoing market volatility means it is not the right time for a retail offer.
Our plan will get back all the cash taxpayers invested in Lloyds during the financial crisis and leave the bank in a better place to continue the crucial role it plays in supporting individuals, families and businesses up and down the UK.
It seems that Hammond’s aim is to get rid of the government’s stake in the bank over the next 12 months.
It looks like shares will be sold below the 73.6p average price at which taxpayers bought a 43% stake in the bank for £20.3bn at the time of the 2008 crisis. The shares are trading around 53p.
The Treasury says that overall it will not make a loss because it has already raised about £16.9bn from previous sell-offs of Lloyds shares.
Updated
at 2.43pm BST
2.28pm BST
14:28
The US non-farm payrolls in charts...
There were 156,000 jobs added in September, lower than the monthly average of 178,000 so far this year:
The US unemployment rate picked up to 5% in September from 4.9% in August:
2.24pm BST
14:24
Here is the full story on non-farm payrolls from the Guardian’s Jana Kasperkevic in New York:
2.20pm BST2.20pm BST
14:2014:20
Rob Carnell, ING’s chief international economist, appears underwhelmed by the US non-farm payrolls report for August, which he describes as “neither here nor there”.Rob Carnell, ING’s chief international economist, appears underwhelmed by the US non-farm payrolls report for August, which he describes as “neither here nor there”.
He says that the report does not rule out a US rate rise in December.He says that the report does not rule out a US rate rise in December.
Reasonable, but not great payrolls, an uptick in the unemployment rate, and softish wages growth – but still good enough to keep thoughts of a December rate hike alive – pending the market reaction to the presidential election, and further adequate labour reports.Reasonable, but not great payrolls, an uptick in the unemployment rate, and softish wages growth – but still good enough to keep thoughts of a December rate hike alive – pending the market reaction to the presidential election, and further adequate labour reports.
Markets will see nothing in this report to encourage thoughts of a November Fed rate hike – most forecasters still expect the Fed to hike in December, and this release is good enough, without being particularly good, to keep such expectations firm.Markets will see nothing in this report to encourage thoughts of a November Fed rate hike – most forecasters still expect the Fed to hike in December, and this release is good enough, without being particularly good, to keep such expectations firm.
Carnell flags up the key dates in the run-up to the Fed’s December rate decision:Carnell flags up the key dates in the run-up to the Fed’s December rate decision:
2.06pm BST2.06pm BST
14:0614:06
The weaker-than-expected 156,000 rise in non-farm payrolls in September was weaker than the average monthly jobs growth of 178,000 so far this year.The weaker-than-expected 156,000 rise in non-farm payrolls in September was weaker than the average monthly jobs growth of 178,000 so far this year.
The biggest single driver behind new jobs last month was the professional and business services sector, up 67,000.The biggest single driver behind new jobs last month was the professional and business services sector, up 67,000.
There were also rises in healthcare jobs, retail, and the food and drink sectors.There were also rises in healthcare jobs, retail, and the food and drink sectors.
But employment in other major industries, including manufacturing, construction, logistics and government were little changed.But employment in other major industries, including manufacturing, construction, logistics and government were little changed.
1.37pm BST1.37pm BST
13:3713:37
US jobless rate rises unexpectedlyUS jobless rate rises unexpectedly
The September jobs report from the US Labor Department also revealed a surprise rise in the unemployment rate to 5% from 4.9% in August.The September jobs report from the US Labor Department also revealed a surprise rise in the unemployment rate to 5% from 4.9% in August.
Average earnings were in line with expectations, rising by 0.2% month-on-month, following a 0.1% increase in August.Average earnings were in line with expectations, rising by 0.2% month-on-month, following a 0.1% increase in August.
The weaker-than-expected jobs report will lower expectations that the Federal Reserve will raise rates before the end of the year.The weaker-than-expected jobs report will lower expectations that the Federal Reserve will raise rates before the end of the year.
UpdatedUpdated
at 1.43pm BSTat 1.43pm BST
1.33pm BST1.33pm BST
13:3313:33
Breaking: US non-farm payrolls lower than expectedBreaking: US non-farm payrolls lower than expected
There were 156,000 jobs added in September, lower than the 175,000 forecast by economists.There were 156,000 jobs added in September, lower than the 175,000 forecast by economists.
That’s a significant miss. Slightly better news was that the figure for August was revised up to 167,000 from 151,000. More soon.That’s a significant miss. Slightly better news was that the figure for August was revised up to 167,000 from 151,000. More soon.
1.27pm BST1.27pm BST
13:2713:27
It’s almost time for US non-farm payrolls for September.It’s almost time for US non-farm payrolls for September.
Here are consensus expectations:Here are consensus expectations:
1.11pm BST1.11pm BST
13:1113:11
Worth mentioning this morning’s UK trade data for August, which was worse than expected.Worth mentioning this morning’s UK trade data for August, which was worse than expected.
Britain’s trade in goods deficit widened to £12.1bn in August, from a downwardly revised £9.5bn in July according to the Office for National Statistics. Economists had forecast an £11.3bn deficit.Britain’s trade in goods deficit widened to £12.1bn in August, from a downwardly revised £9.5bn in July according to the Office for National Statistics. Economists had forecast an £11.3bn deficit.
The deficit widened so much because growth in imports was far sharper than growth in exports. Imports rose by £2.7bn to £37.9bn, while exports increased by just £100m to £25.8bn.The deficit widened so much because growth in imports was far sharper than growth in exports. Imports rose by £2.7bn to £37.9bn, while exports increased by just £100m to £25.8bn.
On a day when the pound is under the spotlight, the trade figures seem to suggest that as yet, the fall in sterling since the 23 June Brexit vote has yet to boost exports as hoped.On a day when the pound is under the spotlight, the trade figures seem to suggest that as yet, the fall in sterling since the 23 June Brexit vote has yet to boost exports as hoped.
12.24pm BST12.24pm BST
12:2412:24
We haven’t heard anything yet from the chancellor Philip Hammond on the pound’s flash crash overnight.We haven’t heard anything yet from the chancellor Philip Hammond on the pound’s flash crash overnight.
He is in Washington DC (where it is almost 7.30am) for the IMF meetings. We’ll see if has any comment as business gets underway in the US.He is in Washington DC (where it is almost 7.30am) for the IMF meetings. We’ll see if has any comment as business gets underway in the US.
In Washington DC for IMF meetings. More important than ever that Britain works with international partners to secure continued global growthIn Washington DC for IMF meetings. More important than ever that Britain works with international partners to secure continued global growth
12.11pm BST12.11pm BST
12:1112:11
The latest scores:The latest scores:
12.08pm BST12.08pm BST
12:0812:08
Connor Campbell, financial analyst at Spreadex, says investors only now seem to the reality of Brexit:Connor Campbell, financial analyst at Spreadex, says investors only now seem to the reality of Brexit:
If the pound was a prize fighter the referee would have already rung the bell, the currency bloodied and bruised beyond belief. It seems that sterling is recreating last night’s flash crash in slow motion, its losses against the dollar widening to 2.6%, taking it under $1.23 in the process; against the euro things were just as bad, the pound plunging under €1.13 following a 2.4% fall.If the pound was a prize fighter the referee would have already rung the bell, the currency bloodied and bruised beyond belief. It seems that sterling is recreating last night’s flash crash in slow motion, its losses against the dollar widening to 2.6%, taking it under $1.23 in the process; against the euro things were just as bad, the pound plunging under €1.13 following a 2.4% fall.
Beyond the post-flash crash fear that seems to have taken hold of investors, the intensification of sterling’s decline can largely be pinned on two factors this morning.Beyond the post-flash crash fear that seems to have taken hold of investors, the intensification of sterling’s decline can largely be pinned on two factors this morning.
Firstly, both the manufacturing and industrial production readings came in below expectations at 0.2% and -0.4% respectively, somewhat contradicting the positive PMIs from earlier in the week. Secondly, and perhaps most damningly, HSBC issued a pretty bleak statement claiming that, as the ‘defacto official opposition to the government’s [Brexit] policies’, the pound could well find itself circling $1.10 by the end of next year.Firstly, both the manufacturing and industrial production readings came in below expectations at 0.2% and -0.4% respectively, somewhat contradicting the positive PMIs from earlier in the week. Secondly, and perhaps most damningly, HSBC issued a pretty bleak statement claiming that, as the ‘defacto official opposition to the government’s [Brexit] policies’, the pound could well find itself circling $1.10 by the end of next year.
As has been the trend this week the pound’s plight has proven to be catnip for the FTSE, with the UK index climbing 58 points to tickle 7070. The Eurozone indices, on the other hand, are less than enthused about the euro’s recent strength, with the DAX and CAC both falling 0.8% apiece.As has been the trend this week the pound’s plight has proven to be catnip for the FTSE, with the UK index climbing 58 points to tickle 7070. The Eurozone indices, on the other hand, are less than enthused about the euro’s recent strength, with the DAX and CAC both falling 0.8% apiece.
11.47am BST
11:47
Sterling: how low did it go? (And why does it matter?). This FT piece from Katie Martin and Jennifer Hughes is well worth a read.
It talks about the technical difficulty of finding one correct figure for the pound’s low in last night’s flash crash. They explain:
The problem with finding the actual low is that currencies are traded on dozens of different platforms, and the levels each shows reflect the trades that are conducted on that system. In normal market conditions, this makes little if any difference. The move overnight was… not normal.
EBS, the trading platform owned and operated by ICAP and one of the central points of reference, particularly for sterling, says it is taking $1.1938 as the low – a level that was traded “in low amount”.
Bloomberg’s reported low is $1.1841.
Thomson Reuters, however, is our outlier. Earlier, the system reported a trade at $1.1378 – wildly below the other big platforms. That has since been scrubbed from the system. It is however standing by an absolute low of $1.1491 in a trade at 23.07 GMT – or 7.07am Hong Kong time, which is when the plunge began.
That is not all. Reuters is also publishing a “market low” where a “good amount” – ie, £5m or more, was traded within a 3 minute window. This low was $1.15 and happened “around the same time as the absolute low.”
Good luck to the traders trying to work this one out.
11.30am BST
11:30
Juncker: EU must be firm with UK on Brexit
The message is coming in loud and clear from the EU now: we will be tough with the UK on Brexit.
The latest comments come from Jean-Claude Juncker, president of the European Commission.
Speaking in Paris on Friday, he said:
It should be obvious that if the United Kingdom wants to have free access to the [EU’s] internal market all the rules and all the liberties...need to be fully respected.
You can’t have one foot in and one foot out. On this point we need to be intransigent. I see the manoeuvring.
Expectations are mounting that the UK is in store for a so-called “hard Brexit”, with the UK government prioritising greater control on immigration over full access to the single market.
Here is our full story on those tough Brexit comments from the French President, François Hollande:
11.13am BST
11:13
Simon French from Panmure Gordon draws a parallels with other periods of economic crisis in the UK:
1.223 GBPUSD will bring YoY bear market in cable. They were not great economic events that led to four previous occasions #sterling #Brexit pic.twitter.com/VJmXc71VGg
11.01am BST
11:01
Pound falls below $1.24; FTSE gains 75 points
After regaining some ground following the overnight 6% drop in the pound, it is now down 2% against the dollar at $1.2335.
But investors are putting their money into Britain’s biggest, global companies, listed on the FTSE 100. The index of major shares is up 76 points or 1% at 7,075.
Jasper Lawler, market analysts at CMC markets, said markets are a little “dazed and confused” today.
Traders have been left reeling from a historic flash crash in the pound. A weaker pound continues to be a positive for UK equities, which were flirting with record highs.
But the size of the drop in currency markets was not mirrored in the rise in the FTSE 100. The benefits of a weaker pound for exports and higher inflation are being offset by a concern the exchange rate’s decline has become destabilising.
Equity indices in the Eurozone, which don’t reap the currency benefits of a devalued British pound were showing caution, down slightly, ahead of this afternoon’s US jobs data.
The FTSE’s top risers at the moment:
Updated
at 11.01am BST
10.48am BST
10:48
UK industry shrinks unexpectedly in August
There have been disappointing figures from Britain’s industrial sector this morning.
Industrial output fell unexpectedly in August by 0.4%, following a 0.1% rise in July according to the Office for National Statistics. Economists polled by Reuters were forecasting a 0.1% increase.
Manufacturing output - classed as a sub sector of the broader industrial measure - also disappointed, rising by 0.2% in August against expectations of a 0.5% increase. It was better than July however, when output fell by 0.9%.
Mining and quarrying was the biggest drag on industry in August, falling by 3.7%, largely because of maintenance in several North Sea oil fields .
It slowed the annual growth rate of industrial production to 0.7% in August from 2.1% in July. Economists said the sector was likely to be a drag on economic growth in the third quarter overall.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, believes industrial production is set for a 0.2% fall quarter-on-quarter in the third quarter.
He adds:
Thankfully, however, strong increases in services output in June and July suggest that GDP growth won’t slow too sharply in Q3; we still expect 0.5% growth.
10.15am BST
10:15
Bank of England to investigate crash in pound
The Bank of England has confirmed that it will investigate why the pound plunged inexplicably overnight.
A simple statement from the Bank, but a significant one:
We are looking at the causes of the sharp falls over night.
Although the pound has regained some ground following the 6% fall, it is still down 1.6% at $1.2409 against the dollar.
It has left the pound on course for its worst week since the Brexit vote in June.
Updated
at 10.16am BST
10.08am BST
10:08
Jeremy Cook, chief economist at World First, says the slump in the pound has “all the hall marks of a computer system going a bit haywire”.
He also says it seems possible that some orders placed overnight might become the subject of dispute.
9.50am BST
09:50
HSBC: pound will drop to $1.10 by end of 2017
A very gloomy prediction from HSBC. The bank’s currency experts say the pound has some way to go before it reaches a bottom.
Specifically, they say the pound will fall to $1.10 against the dollar and hit parity against the euro by the end of 2017, as fears of a hard Brexit intensify.
David Bloom, HSBC’s global head of FX, says the pound has become a political currency.
Brexit, whether one likes it or not, is a political decision, one we have to respect. The currency is now the de facto official opposition to the government’s policies.
The argument which is still presented to us, that the UK and EU will resolve their difference and come to an amicable deal, appears a little surreal. It is becoming clear that many European countries will come to the negotiation table looking for political damage limitation rather than economic damage limitation. A lose-lose situation is the inevitable outcome.
The pound used to be a relatively simple currency that used to trade on cyclical events and data, but now it has become a political and structural currency. This is a recipe for weakness given its twin deficits.
Tin hats on folks!
Updated
at 9.54am BST
9.27am BST
09:27
And again, off that cliff:
9.23am BST
09:23
The FT has taken an interesting look at how the pound fell from $1.26 against the dollar to a little over $1.18 in two minutes.
Below is an extract, but you can read the full piece here.
In the Hong Kong/Singapore timezone, 7.07am to 7.09am. In the 60 seconds from 7.07am, the pound moved from $1.26 through $1.25 to a low of $1.203. Between $1.26 and $1.25, traders say the move was orderly. But when it tumbled through $1.24 “that was when all hell broke loose,” according to one banker.
The low was $1.1819 at 7.09am, based on Reuters data. It took a further 30 minutes for the pound to regain $1.24, during which time activity was fairly steady as traders regained composure after that unnerving tumble.
Updated
at 9.55am BST