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UK jobless rate sticks at 4.9%, but pay squeeze may be looming – business live UK jobless rate sticks at 4.9%, but pay squeeze may be looming – as it happened
(35 minutes later)
6.03pm BST
18:03
European markets edge higher
It was not a convincing performance, but European stock markets managed to end the day in positive territory. There was the usual nervousness - Brexit, US interest rates - with the added bonus of some caution ahead of the final US presidential debate later and the European Central Bank’s interest rate and QE decision on Thursday.
UK jobs figures came in strong enough to suggest that the Bank of England may hold off on cutting interest rates next month, while supportive comments from chancellor Philip Hammond about the Bank’s independence and the future of finance companies in the City post-Brexit also gave some support to shares.
A jump in the oil price following a surprise drop in US crude stocks helped sentiment too. So the final scores showed:
On Wall Street, the Dow Jones Industrial Average is currently up 76 points or 0.42%.
Meanwhile Brent crude is up 2.3% at $52.89, but the pound has edged 0.18% lower against the dollar to $1.2274.
On that note it’s time to close for the evening. Thanks for all your comments and we’ll be back tomorrow.
5.34pm BST5.34pm BST
17:3417:34
Back with UK unemployment, and IHS Markit thinks unemployment could continue to rise:Back with UK unemployment, and IHS Markit thinks unemployment could continue to rise:
UK unemployment shows signs of rising as hiring cools, households grow gloomier about their finances. More at https://t.co/0SkYz4SFJB pic.twitter.com/XEWXy1oWCBUK unemployment shows signs of rising as hiring cools, households grow gloomier about their finances. More at https://t.co/0SkYz4SFJB pic.twitter.com/XEWXy1oWCB
4.24pm BST4.24pm BST
16:2416:24
Bank of England report on QEBank of England report on QE
And now for the big autumn blockbuster: QE: The Story So Far.And now for the big autumn blockbuster: QE: The Story So Far.
The Bank of England has just issued a 73 page working paper, which MPC member Andy Haldane will be discussing later at Cass Business School, on the effects of quantitative easing. Interesting of course, in the light of prime minister Theresa May’s criticism of the effects of monetary policy in her Tory party conference speech. Here’s the blurb from the Bank:The Bank of England has just issued a 73 page working paper, which MPC member Andy Haldane will be discussing later at Cass Business School, on the effects of quantitative easing. Interesting of course, in the light of prime minister Theresa May’s criticism of the effects of monetary policy in her Tory party conference speech. Here’s the blurb from the Bank:
In the past decade or so, a number of central banks have purchased assets financed by the creation of central bank reserves as a tool for loosening monetary policy – a policy often known as ‘quantitative easing’ or ‘QE’.In the past decade or so, a number of central banks have purchased assets financed by the creation of central bank reserves as a tool for loosening monetary policy – a policy often known as ‘quantitative easing’ or ‘QE’.
The first half of the paper reviews the international evidence on the impact on financial markets and economic activity of this policy. It finds that these central bank balance sheet expansions had a discernible and significant impact on financial markets and the economy.The first half of the paper reviews the international evidence on the impact on financial markets and economic activity of this policy. It finds that these central bank balance sheet expansions had a discernible and significant impact on financial markets and the economy.
The second half of the paper provides new empirical analysis on the macroeconomic impact of central bank balance sheet expansions, across time and countries.The second half of the paper provides new empirical analysis on the macroeconomic impact of central bank balance sheet expansions, across time and countries.
It finds three key results. First, it is only when central bank balance sheet expansions are used as a monetary policy tool that they have a significant macro-economic impact. Second, there is evidence for the US that the effectiveness of QE may vary over time, depending on the state of the economy and liquidity of the financial system. And third, QE can have strong spill-over effects cross-border, acting mainly via financial channels. For example, the impact of US QE on UK economic activity may be as large as the impact on US economic activity.It finds three key results. First, it is only when central bank balance sheet expansions are used as a monetary policy tool that they have a significant macro-economic impact. Second, there is evidence for the US that the effectiveness of QE may vary over time, depending on the state of the economy and liquidity of the financial system. And third, QE can have strong spill-over effects cross-border, acting mainly via financial channels. For example, the impact of US QE on UK economic activity may be as large as the impact on US economic activity.
The full report can be found here”The full report can be found here”
Staff working paper 624: QE: the story so farStaff working paper 624: QE: the story so far
UpdatedUpdated
at 4.39pm BSTat 4.39pm BST
4.15pm BST4.15pm BST
16:1516:15
The rise in the oil price - to its highest since July 2015 - is giving a lift to the FTSE 100 as trading heads towards the close. Joshua Mahony, market analyst at IG, said:The rise in the oil price - to its highest since July 2015 - is giving a lift to the FTSE 100 as trading heads towards the close. Joshua Mahony, market analyst at IG, said:
The FTSE appears to be following oil prices higher this afternoon, with initial selling giving way to gains into the close. Fears that earnings forecasts were too high have been shown, thus far, to be unproven, with the result that equities have been able to rally once again. This afternoon’s sharp drawdown in crude inventories will be welcomed by oil bulls, with a reduction of 5.2 million barrels confounding market expectations of a second consecutive weekly rise. Lower inventories do not always translate into lower production, yet a smaller amount of oil sloshing about is surely likely to improve the supply and demand dynamic, hence the outperformance of WTI over Brent.The FTSE appears to be following oil prices higher this afternoon, with initial selling giving way to gains into the close. Fears that earnings forecasts were too high have been shown, thus far, to be unproven, with the result that equities have been able to rally once again. This afternoon’s sharp drawdown in crude inventories will be welcomed by oil bulls, with a reduction of 5.2 million barrels confounding market expectations of a second consecutive weekly rise. Lower inventories do not always translate into lower production, yet a smaller amount of oil sloshing about is surely likely to improve the supply and demand dynamic, hence the outperformance of WTI over Brent.
The FTSE 100 is currently up around 25 points at 7025, after earlier falling as low as 6975.The FTSE 100 is currently up around 25 points at 7025, after earlier falling as low as 6975.
UpdatedUpdated
at 4.58pm BSTat 4.58pm BST
4.07pm BST4.07pm BST
16:0716:07
Oil price rises on fall in US crude stocksOil price rises on fall in US crude stocks
Oil prices are on the rise after new US figures showed a surprise drop in crude stockpiles last week, compared to expectations of an increase.Oil prices are on the rise after new US figures showed a surprise drop in crude stockpiles last week, compared to expectations of an increase.
The Energy Information Administration said US crude stocks fell by 5.2m barrels, when analysts had been forecasting a 2.7m rise.The Energy Information Administration said US crude stocks fell by 5.2m barrels, when analysts had been forecasting a 2.7m rise.
The news of increased demand has seen Brent crude climb 2.6% to $53.05 a barrel, while West Texas Intermediate has jumped 3.2% to $51.93.The news of increased demand has seen Brent crude climb 2.6% to $53.05 a barrel, while West Texas Intermediate has jumped 3.2% to $51.93.
Earlier crude received some support from renewed hopes that producers would take measures to reduce output, but some were sceptical. Jasper Lawler at CMC Markets said:Earlier crude received some support from renewed hopes that producers would take measures to reduce output, but some were sceptical. Jasper Lawler at CMC Markets said:
Saudi Arabian Energy Minister Khalid Al-Falih saying many nations are willing to joint the OPEC production cut was taken with a pinch of salt.Saudi Arabian Energy Minister Khalid Al-Falih saying many nations are willing to joint the OPEC production cut was taken with a pinch of salt.
UpdatedUpdated
at 4.32pm BSTat 4.32pm BST
3.15pm BST3.15pm BST
15:1515:15
Philip Hammond’s comments are giving some support to the UK markets, according to Kathleen Brooks, research director at City Index:Philip Hammond’s comments are giving some support to the UK markets, according to Kathleen Brooks, research director at City Index:
Hammond’s testimony to the Treasury Committee has, so far, helped to support the pound and UK stocks this afternoon, although they haven’t ignited a major wave of buying of UK assets either. The markets seem comfortable, rather than ecstatic, about his comments including confirmation that the Bank of England will remain independent, and that no conclusion has yet been reached on the exact Brexit deal that will be sought by the UK government. He admitted that there are different opinions in the cabinet over how to approach Brexit, however Hammond and May are reportedly close, so his view could suggest that May’s own view is less severe than she put across at her Party conference.Hammond’s testimony to the Treasury Committee has, so far, helped to support the pound and UK stocks this afternoon, although they haven’t ignited a major wave of buying of UK assets either. The markets seem comfortable, rather than ecstatic, about his comments including confirmation that the Bank of England will remain independent, and that no conclusion has yet been reached on the exact Brexit deal that will be sought by the UK government. He admitted that there are different opinions in the cabinet over how to approach Brexit, however Hammond and May are reportedly close, so his view could suggest that May’s own view is less severe than she put across at her Party conference.
Although the pound has fallen back from its intra-daily highs versus the dollar at 1.2332, Hammond’s comments seem to support the pound/dollar around the 1.23 level. We believe that, on balance, his comments that nothing is set in stone regarding Brexit, is more market-friendly than the “hard” Brexit rhetoric that has come from Number 10 in recent weeks.Although the pound has fallen back from its intra-daily highs versus the dollar at 1.2332, Hammond’s comments seem to support the pound/dollar around the 1.23 level. We believe that, on balance, his comments that nothing is set in stone regarding Brexit, is more market-friendly than the “hard” Brexit rhetoric that has come from Number 10 in recent weeks.
Although Hammond is not giving anything away at this stage of his testimony, it gives the markets a glimmer of hope that the UK may not target a “hard” brexit. His opening comments did mention that the current government will bring down net migration to the UK, however, he hasn’t linked this to throwing out access to the EU single market or customs union. This is significant, as it is a softer approach from what the market had perceived from PM Theresa May’s comments at the Tory Party conference at the start of this month.Although Hammond is not giving anything away at this stage of his testimony, it gives the markets a glimmer of hope that the UK may not target a “hard” brexit. His opening comments did mention that the current government will bring down net migration to the UK, however, he hasn’t linked this to throwing out access to the EU single market or customs union. This is significant, as it is a softer approach from what the market had perceived from PM Theresa May’s comments at the Tory Party conference at the start of this month.
Hammond said the government will not pursue the policies outlined by former Chancellor George Osborne in April, which included a further cut to corporation tax, however this was to be expected. Regarding the economic impact from Brexit, the Chancellor said that he would examine the fiscal and economic impact of all Brexit options. From a “Remainer’s” perspective, this seems like a more sensible approach to leaving the European Union, compared to some of the extreme approaches that appeared to disregard the economic impact in favour of reducing immigration.Hammond said the government will not pursue the policies outlined by former Chancellor George Osborne in April, which included a further cut to corporation tax, however this was to be expected. Regarding the economic impact from Brexit, the Chancellor said that he would examine the fiscal and economic impact of all Brexit options. From a “Remainer’s” perspective, this seems like a more sensible approach to leaving the European Union, compared to some of the extreme approaches that appeared to disregard the economic impact in favour of reducing immigration.
Although Hammond is giving nothing away, his comments may sooth some economic concerns regarding the Brexit process. Overall, his comments so far seem to be supportive of the current recovery in the pound and FTSE 100. But whether or not these gains can be sustained, could depend on this evening’s final US Presidential debate. A win for Clinton could sew up the race for her, which could be a short-term positive for the buck, but may limit further sterling gains.Although Hammond is giving nothing away, his comments may sooth some economic concerns regarding the Brexit process. Overall, his comments so far seem to be supportive of the current recovery in the pound and FTSE 100. But whether or not these gains can be sustained, could depend on this evening’s final US Presidential debate. A win for Clinton could sew up the race for her, which could be a short-term positive for the buck, but may limit further sterling gains.
2.49pm BST2.49pm BST
14:4914:49
Wall Street opens mixedWall Street opens mixed
Away from the UK, and US stock markets have struggled for direction in early trading, ahead of the final presidential debate later.Away from the UK, and US stock markets have struggled for direction in early trading, ahead of the final presidential debate later.
The Dow Jones Industrial Average is currently up 24 points or 0.12% while the S&P 500 opened a couple of points higher. But Nasdaq dipped at the open after chip maker Intel issued a disappointing update.The Dow Jones Industrial Average is currently up 24 points or 0.12% while the S&P 500 opened a couple of points higher. But Nasdaq dipped at the open after chip maker Intel issued a disappointing update.
Earlier US housing starts fell to a one and a half year low in September, down 9% to a seasonally adjusted annual rate of 1.05m units. Analysts had expected a rise form 1.15m to 1.18m units.Earlier US housing starts fell to a one and a half year low in September, down 9% to a seasonally adjusted annual rate of 1.05m units. Analysts had expected a rise form 1.15m to 1.18m units.
2.40pm BST2.40pm BST
14:4014:40
On trade deals outside the EU, Hammond says it would not be appropriate to enter into substantive trade talks with a third country until Article 50 is triggered.On trade deals outside the EU, Hammond says it would not be appropriate to enter into substantive trade talks with a third country until Article 50 is triggered.
2.39pm BST2.39pm BST
14:3914:39
On Brexit, Hammond is asked by chair Andrew Tyrie if we are leaving the customs union.On Brexit, Hammond is asked by chair Andrew Tyrie if we are leaving the customs union.
Hammond says there are discussions taking place, and no conclusions have been reached on the precise arrangements.Hammond says there are discussions taking place, and no conclusions have been reached on the precise arrangements.
But this will be a negotiation between two sovereign entities, he says we should not be constrained by existing structures.But this will be a negotiation between two sovereign entities, he says we should not be constrained by existing structures.
In that case we must be leaving the customs union?In that case we must be leaving the customs union?
We haven’t made an decision, repeats Hammond.We haven’t made an decision, repeats Hammond.
2.34pm BST2.34pm BST
14:3414:34
Hammond is being quizzed on monetary policy, and says it is the responsibility of the Bank of England’s monetary policy committee and there are no plans to change this.Hammond is being quizzed on monetary policy, and says it is the responsibility of the Bank of England’s monetary policy committee and there are no plans to change this.
This follows prime minister Theresa May’s comments at the Tory party conference which were taken as an attack on the Bank.This follows prime minister Theresa May’s comments at the Tory party conference which were taken as an attack on the Bank.
2.23pm BST2.23pm BST
14:2314:23
As a reminder, chancellor Philip Hammond is about to give evidence to the Treasury select committee.As a reminder, chancellor Philip Hammond is about to give evidence to the Treasury select committee.
My colleague Andrew Sparrow will be following events in detail in the politics live blog:My colleague Andrew Sparrow will be following events in detail in the politics live blog:
And there is a live feed from Parliament TV here.And there is a live feed from Parliament TV here.
2.14pm BST2.14pm BST
14:1414:14
Over in the markets, the pound continues to hold steady against both the dollar and the euro, as the latest data suggests the Bank of England is unlikely to cut interest rates in November:Over in the markets, the pound continues to hold steady against both the dollar and the euro, as the latest data suggests the Bank of England is unlikely to cut interest rates in November:
Nice to see the UK Pound £ nudge both US $1.23 and Euro 1.12 this afternoon....Nice to see the UK Pound £ nudge both US $1.23 and Euro 1.12 this afternoon....