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Markets shrug off trade war fears and Spanish vote as US jobs beat forecasts - business live Markets shrug off trade war fears and Spanish vote as US jobs beat forecasts - business live
(35 minutes later)
And more Trump. The president has turned his attention back to trade, and Canada:
Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade! They must open their markets and take down their trade barriers! They report a really high surplus on trade with us. Do Timber & Lumber in U.S.?
Former US treasury secretary Summers has strong views on the Trump tweet which came ahead of the official announcement of the jobs numbers:
If during the Clinton or Obama Administrations there had been a statement from @POTUS or anyone senior official in the morning before the Employment Report it would have been a major scandal—with all sorts of investigations following on.
More from ING Bank. Economist James Smith says the jobs data means a June rate hike is still on the cards. He said:
Rising employment and an above-consensus wage growth figure will reinforce expectations for a rate rise in a couple of weeks, although Fed voters will also have a firm eye on the latest trade developments.
President Trump said shortly before today’s US jobs report that he was “looking forward” to seeing the numbers. And with the economy having added 223k jobs in May, he is likely to be fairly chuffed.
The unemployment rate fell to 3.8%, a new post-crisis low, and in fact came within spitting distance of 3.7% once rounding is taken into consideration. This decline came as almost 300,000 job hunters found employment in May according to the household survey.
But for the Fed, the key positive in this month’s report is that wage growth beat estimates, taking the year-on-year rate back up to 2.7%. This comes as firms appear to be finding it harder to fill positions. The proportion of small businesses finding it hard to fill job openings continues to flirt with all-time highs, while it’s taking around twice as long to fill vacancies than it did during depths of the financial crisis. We think wage growth could test 3% again this year as these skill shortages gradually filter through to the official numbers.
All of this means that a rate hike is still highly likely from the Fed in a couple of weeks’ time. Our base case is that the committee will hike a further two times after that in 2018, although of course there’s no doubt that Fed officials will be keeping a firm eye on the brewing global trade war, and this is the main risk to our view.
As far as the jobs numbers are concerned, we suspect it is probably too early to see the effect of Trump’s metal tariffs in this month’s data, but things could start to look a little more concerning over coming months.
There are reportedly only around 300,000 workers directly employed in both the steel and aluminium production industries. By comparison, some estimates have put the number of jobs in companies reliant on steel/aluminium inputs at around 6.5 million – in industries covering aircraft to beer cans. On this basis, the risks stemming from the metals tariffs are likely to be a net negative for the overall jobs market.
Here’s ING strategist Viraj Patel on the US jobs numbers:Here’s ING strategist Viraj Patel on the US jobs numbers:
Hard to find a -ve in the US jobs report. Decent jobs, lower u/e rate, lower U-6 rate. +0.3% MoM wage growth was a rounding effect (+0.298%) which might be the only -ve one could cite (& lower participation rate). Soft reaction in #FX. NFP days mattering less these days... $USD pic.twitter.com/wrTOIpqzkbHard to find a -ve in the US jobs report. Decent jobs, lower u/e rate, lower U-6 rate. +0.3% MoM wage growth was a rounding effect (+0.298%) which might be the only -ve one could cite (& lower participation rate). Soft reaction in #FX. NFP days mattering less these days... $USD pic.twitter.com/wrTOIpqzkb
The US unemployment rate has fallen to a new 17 year low of 3.8%, slightly better than the 3.9% expected. The US unemployment rate has fallen to a new 18 year low of 3.8%, slightly better than the 3.9% expected.
yup, he knew.yup, he knew.
April’s jobs figure was revised down from 164,000 - already weak - to 159,000 but March was higher than originally reported, up from 135,000 to 155,000.April’s jobs figure was revised down from 164,000 - already weak - to 159,000 but March was higher than originally reported, up from 135,000 to 155,000.
On the wages front, year on year earnings were up 2.7% compared to 2.6% in April, in line with forecasts.On the wages front, year on year earnings were up 2.7% compared to 2.6% in April, in line with forecasts.
Month on month, wages grew by 0.3%, a little higher than the expected 0.2%.
Perhaps no surprise given Trump’s positive tweet, but the US jobs figures are much better than expected.Perhaps no surprise given Trump’s positive tweet, but the US jobs figures are much better than expected.
Some 223,000 jobs were created in May compared to expectations of a 190,000 increase.Some 223,000 jobs were created in May compared to expectations of a 190,000 increase.
Back with the EC, and commissioner Malmstrom says we are not in a trade war yet but in a very difficult situation brought on by the US. It is a very worrying situation, she says, it could escalate and the economic recovery risks being diminished by this. “ The US is playing a dangerous game here.”Back with the EC, and commissioner Malmstrom says we are not in a trade war yet but in a very difficult situation brought on by the US. It is a very worrying situation, she says, it could escalate and the economic recovery risks being diminished by this. “ The US is playing a dangerous game here.”
Meanwhile, on the US jobs data which is due shortly, President Trump has tweeted about them ahead of time:Meanwhile, on the US jobs data which is due shortly, President Trump has tweeted about them ahead of time:
Looking forward to seeing the employment numbers at 8:30 this morning.Looking forward to seeing the employment numbers at 8:30 this morning.
This is the first time a president had ever sent a signal to investors about what the jobs numbers might look like an hour before they came out. https://t.co/M8PaXsHnhgThis is the first time a president had ever sent a signal to investors about what the jobs numbers might look like an hour before they came out. https://t.co/M8PaXsHnhg
On the US tariffs, she says the EU is talking to Canada, Mexico, as well as Japan. There might be others as well who will react.On the US tariffs, she says the EU is talking to Canada, Mexico, as well as Japan. There might be others as well who will react.
Malmstrom says the WTO| complaint about the US tariff will be made in the next few days, and the EU is also making a challenge against China on intellectual property. She says:Malmstrom says the WTO| complaint about the US tariff will be made in the next few days, and the EU is also making a challenge against China on intellectual property. She says:
We are not choosing any sides. We are determined to deal with the root causes of the current tension in the trade system. But we need to do that within the rules.We are not choosing any sides. We are determined to deal with the root causes of the current tension in the trade system. But we need to do that within the rules.
Here’s a link to the European Commission press conference by Commissioner Cecilia Malmstrom on the response to the US tariffs.Here’s a link to the European Commission press conference by Commissioner Cecilia Malmstrom on the response to the US tariffs.