EU jobless rate hits seven-year low; US data mixed – as it happened

Graeme Wearden (until 1.45) and Nick Fletcher

from on 2016-05-31 17:02 (#1FK1B)

The European Union's jobless rate has dipped to 8.7%, as the slow recovery continues

6.02pm BST

The closing scores on European markets showed:

5.39pm BST

Inmarsat looks set to leave the FTSE 100 in the quarterly reshuffle announced on Wednesday. The changes are based on Tuesday's closing prices, and its near 4% fall making it the day's biggest faller in the index has confirmed the inevitable. The changes need to be ratified on Wednesday, but it's pretty safe to say Inmarsat will be replaced by Hikma Pharmaceuticals, as forecast.

Companies set to be demoted from the FTSE 250 are:

5.23pm BST

European markets have ended the last day of the month on a downbeat note, with declines accelerating through the day after a Guardian/ICM poll showing the Brexit camp firmly in the lead ahead of June's EU referendum.

The poll knocked sterling lower which in turn unsettled equity investors. Mixed signals from the US economy also took the shine off shares. Markets had seemingly been taking the prospect of a US rate rise, perhaps as early as June, in their stride, supported by the idea that at least the US economy was showing signs of strength. But ahead of the non-farm payrolls figures due on Friday, weaker consumer confidence and manufacturing figures put a bit of a dent in that theory.

4.18pm BST

With markets slipping lower, Joshua Mahony at IG said:

What looked like a boring day in the markets has been kicked into gear as the European indices fell sharply after a surprise EU referendum poll in favour of the 'leave' campaign. Most notably, with the FTSE attempting to break out of its 30 point range that has dominated the past week, this could set the groundwork for a very volatile week. Today has seen a substantial amount of data released, and with a whole week of economic data risk ahead, traders will be wary of increased unpredictability in the coming days.

At a time when markets have been seemingly focusing on the positives of a stronger economy rather than the looming possibility of a rate hike, today's data highlights the fact that while a hike is likely, consumers may not feel so optimistic. Today's rise in the Fed preferred core PCE measure of inflation paves the way for a potential hike in the summer, yet with consumer confidence on the wane, it is clear the everyday person is not looking forward to the prospect of higher rates.

3.58pm BST

Two Guardian/ICM polls showing voters moving in favour of the UK leaving the European Union have helped send sterling to a one week low against the dollar and euro.

The pound fell nearly a cent to $1.4547 after news of the polls, while the euro rose 0.8% to 76.72p.

3.33pm BST

And another May miss.

The Dallas Fed Texas manufactuing index has come in at -20.8, down from -13.9 in April and well below expectations of a figure of -8.

#UnitedStates Dallas @federalreserve Manufacturing Index at -20.8 https://t.co/MBt908Q7Jq pic.twitter.com/5LFzH0LE6m

And the Dallas Fed makes it a run of horrific US Manuf data. Loverly

3.27pm BST

And more on the Chicago PMI numbers:

May Chicago #PMI fell -1.1pts to 49.3 corroborating the weakness in the NY #Fed Empire and Philadelphia Fed series

With all three major regional #PMI surveys in contraction territory, it is highly likely the manufacturing #ISM slips below 50

3.16pm BST

On the confidence figures, Lynn Franco at the Conference Board said:

Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April. Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.

3.06pm BST

So after a couple of pieces of US data which beat expectations, we have two in a row which have disappointed.

The US consumer confidence index came in at 92.6 in May compared to forecasts of 96. This is down on the April figure of 94.7 (itself revised up from 94.2).

3.03pm BST

This is the lowest level for the Chicago PMI since February and the sixth time it has been in contraction over the past 12 months.

Index compilers MNI said: "Barring a solid revival in June, the second quarter could be the weakest outturn since the fourth quarter of 2015 given the April-May average of just 49.9."

While expectations are that growth in the US economy will bounce back in the second quarter, the evidence from the MNI Chicago Report shows activity weakening from an already low level. Firms ran down stocks at the fastest pace for more than 6 years in May, and while a rebuilding over the coming months could support output, the underlying message appears to be that businesses are not confident about the outlook for growth.

2.49pm BST

After the earlier strong US economic data, the Chicago Purchasing Managers Index has come in weaker than expected in May.

The index fell from 50.4 in April to 49.3, below estimates of a level of 50.7. Anything below 50 signals contraction.

FAQ about the #chicagoPMI: why are traders watching it? A: It has a strong correlation with economic activity in the US

2.43pm BST

Back in the US, and markets have opened virtually unchanged after the day's economic data came in stronger than expected and renewed talk of a possible rate rise next month. On Friday Fed chair Janet Yellen said an increase would be appropriate in the coming months.

Investors remain cautious however ahead of Friday's non-farm payroll numbers, the last before the Fed's June meeting.

2.29pm BST

Here's our story confirming that 1,000 jobs are to go as 120 Austin Reed stores are shut:

2.28pm BST

Home prices in 20 U.S. cities increase faster than forecast https://t.co/BkWhRvOzjZ pic.twitter.com/IX4ooZYqrF

2.10pm BST

More fuel for the members of the Fed who want to raise rates before long: better than expected housing figures.

US single family house prices rose 5.4% in March on a year on year basis, the same as the previous month and higher than forecasts of a 5.2% increase, according to the latest S&P/Case Schiller index. David M. Blitzer at the Index Committee said:

The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates. Another factor behind rising home prices is the limited supply of homes on the market.

1.46pm BST

If you're a #Fed official who wants to raise rates in June, the income and spending (and PCE inflation) data are comforting.

1.39pm BST

Just in..... personal spending across America rose by a chunky 1.0% in April.

That beats estimates of a 0.7% rise, and is the biggest jump since August 2009. It suggests US consumers were pretty upbeat about economic prospects last month.

The Commerce Department said on Tuesday consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.0 percent last month as households bought automobiles and a range of other goods and services.

#UnitedStates Personal Income month-on-month at 0.4% https://t.co/dG1izfJESq pic.twitter.com/0oyjH9cM0b

Good news for retailers? Or consumers piling on too much debt? Personal spending surged 1% in April. But incomes up only 0.4%.

1.20pm BST

Good news! Portugal is growing twice as fast as we thought. Bad news! Portugal only grew by 0.2% in the last quarter.

That's according to the Lisbon stats office, which has revised up the initial growth estimates (from 0.1% to 0.2%) today (the FT has more details).

1.02pm BST

Investors should enough the quiet of May while they can, because June is going to be very dramatic.

Britain's vote on EU membership will obviously be huge, while America's central bank's monetary policy meeting could also move global markets.

''As the month of May comes to an end, June looks likely to be even more volatile - with a potential US interest rate hike, the EU referendum in the UK and the price of oil being key risk factors for a market that has been on edge for the entire year.

May was a month where expectations of interest rate increases in the US were brought forward, with the Fed's Bullard the latest prominent voice to suggest that a hike is approaching fast. This week, the markets will be looking to the May non-farm payrolls data on Friday - a strong jobs number will be seen as providing the Fed with the data needed to push ahead with an interest rate hike in June.''

Oh hai, June. From UBS> pic.twitter.com/9bhBpyRAEb

12.38pm BST

A reminder that it's a big week for US economic data, especially for those wondering if the Federal Reserve will raise interest rates next month.

Here's what to watch on the econ calendar this week for clues about a June rate hike (h/t @springbetsy) @CNBC pic.twitter.com/EL7hiCLERf

12.17pm BST

Developments in Athens....

Dockworkers outside #Greece's FinMin. They just managed to cancel shareholders meeting with privatization fund. pic.twitter.com/wYDRXPHTF7

12.12pm BST

The drop in European unemployment hasn't improved the mood in a rather damp City.

All the main stock markets are now in the red, as May drags to an end.

The Eurozone-wide inflation figure, meanwhile, came in at an expected -0.1%. That is an improvement on the -0.2% seen last month, but still means that the region has spent more of 2016 in deflation territory than it has not despite the influx of new stimulus measures back in March.

None of this news provided much cheer for investors.

11.52am BST

Over in Greece, scuffles have broken out between protesting port workers and riot police.

The dock workers are demonstrating in the Greek capital, against plans to privatise Piraeus, the largest port in Greece. They fear the sale, which is demanded by creditors, will cost jobs.

Fearing layoffs, port workers have been on 48-hour rolling strikes since last week and have said they will not return to work unless their requests are addressed.

"Everything, taxes, bills, the living cost, is going up. Daily food has become more expensive. And myself, I don't know if I have job tomorrow," said port worker Antonis Peristerakis, 49, father of two children. "I need security. I want to have food for my children. I don't want to look for a job at the age of 49."

Striking ports workers march to protest Greek ports sales https://t.co/jTFDP6TkwV pic.twitter.com/KWtzgcDuW5

11.18am BST

Back in the UK, almost 1,000 jobs are being lost as part of a deal to 'rescue' high street tailor Austin Reed.

The majority of Austin Reed's stores will close with the loss of nearly 1,000 jobs after administrators to the collapsed menswear chain were only able to find a buyer for its famous brand and stock.

Sources familiar with the negotiations said Edinburgh Woollen Mill had refused to take the bulk of the shops as part of a deal, meaning administrators will now begin an orderly 'wind down' of the chain's estate in the coming days.

Sadly, I've learnt that EWM will only buy the Austin Reed brand and stock, meaning nearly 100 stores will close with the loss of 1,000 jobs

Big blow as several high profile names had come forward since the chain collapsed, raising hopes that it would be saved

11.10am BST

Young people are still bearing the brunt of Europe's unemployment problem.

The youth jobless rate in the EU has dropped to 18.8%, from 20.7% in April 2015. That still leaves 4.2 million under-25s out of work across the region.

#Italy and the rest: Youth unemployment rates drop across the #Eurozone w/ exception of #Italy. Rate rose to 36.9%. pic.twitter.com/0Ysm106hCc

10.58am BST

Martin Janicko, economist at Moody's Analytics, also believes Europe's labour market is improving...

"The euro zone's unemployment rate was 10.2% in April, unchanged from the previous month but down from 11% a year earlier."

"Declines in the jobless rate were recorded in most euro zone countries. Particularly encouraging are drops in joblessness in Greece, Ireland, and Spain. Periphery countries have had the largest drops over the past few months, reflecting their rebound, while the European core broadly held ground. Nevertheless, headline unemployment and youth unemployment rates are still elevated in the euro zone, with only Germany reporting a youth unemployment rate below 10%."

10.38am BST

Here's some reaction to the news that the eurozone inflation rate remains negative this month, at -0.1%.

Joshua Mahony, market analyst at IG, says inflation remains "within the doldrums"; even though the European Central Bank is running a huge bond-buying QE programme and record low interest rates.

Despite the ECB embarking on a substantial round of easing, the fact that the Eurozone remains within deflation is a clear heads up that monetary policy alone cannot fix the problem of stagnant price growth.

Eurozone CPI remains in deflation as expected. -0.1% vs -0.2% previously pic.twitter.com/PeHWxAZ6CN

Eurozone remains in #deflation despite #ECB's balance sheet expansion. CPI drops 0.1% in May https://t.co/oewA5EEB5E pic.twitter.com/TX6o4FQ309

Euro area May flash HICP breakdown: services up, but some disappointment in other core prices (NEIG). pic.twitter.com/FelxohvTaj

10.30am BST

Howard Archer, economist at IHS Global Insight, reckons today's data shows the eurozone labour market is slowly improving.

He points out that the jobless total did drop in April, although not by enough to pull the headline rate down from 10.2%.

Eurozone unemployment fell by 63,000 in April to stand at 16.420 million, which is the lowest level since August 2011.....

The decent underlying marked drop in Eurozone unemployment in April/March suggests that the pick-up in Eurozone GDP growth in the first quarter may be feeding through to lift employment.

10.22am BST

There are still stark differences in Europe's labour markets, which partly reflects the austerity measures imposed on its weaker members.

Today's report shows that there are 21.2 million unemployed men and women across the 28 countries which make up the EU, including 16.4 million were in the euro area.

10.09am BST

Unemployment in the European Union has hit a new seven-year low of 8.7% in April.

That's rather better than the eurozone average of 11.2%, but still means Europe is lagging behind America (where the jobless rate is 5%)

Lowest unemployment rate in euro area since Aug 2011, in EU since April 2009 #Eurostat https://t.co/g0k4SFvob8 pic.twitter.com/w1aV1bqQxR

10.07am BST

The eurozone is still stuck in negative inflation!

Prices across the single currency region fell by 0.1% in May, the flash estimate from Eurostat shows. Once again, cheap oil is mainly responsible.

Euro area inflation up to -0.1% in May 2016 (-0.2% in Apr): flash estimate from #Eurostat https://t.co/7F3txNmZzX pic.twitter.com/4NeTb1T5uW

10.02am BST

Here comes the splurge of Euorpean economic data, to take City traders' minds off the weather.

And Europe's unemployment rate remains stuck at 10.2% in April, meaning no improvement on March's figures....

9.51am BST

Told you it was looking a bit grim out there #splishsplashsplosh

At least London didn't get today's crap weather for the long weekend. Deceased umbrellas and wet owners everywhere

9.49am BST

The British pound has weakened a little this morning, as investors continue to ponder next month's EU referendum.

Sterling is down almost half a cent against the US dollar, at $1.4601.

So predictable: Hedge funds and banks commission Brexit exit polls - https://t.co/4aDqWYbO9h https://t.co/A18UUPocuy via @FT

9.29am BST

Unfortunately, the Italian jobs malaise also continues...

The Italian unemployment rate has jumped to 11.7% in April, up from 11.5% in March.

#Italy unemployment picking up again: April flash 11.7% vs 11.4% exp https://t.co/x4QpiuFkqC /via @ForexLive

9.18am BST

The German jobs miracle continues.

Germany's jobless rate has fallen to a new record low of just 6.1% in May, down from 6.2%. That's the lowest since East and West Germany were reunified in 1990, as Europe's largest economy outperforms its weaker neighbours.

"The labour market continues its overall positive development," Frank-Juergen Weise, head of the Federal LabourOffice said in a statement. "Unemployment fell in the course of spring. Employment rose sharply and the demand for labour also increased significantly."

The seasonally-adjusted jobless total fell by 11,000 to2.695 million, the Labour Office said. That compares with a consensus forecast in a Reuters poll for unemployment to fall by 5,000.

*GERMAN JOBLESS RATE FELL TO RECORD LOW OF 6.1% IN MAY

9.11am BST

Unless we get a big crash today, European stock markets will post their best month since last October.

9.00am BST

European stock markets have started the week in an edgy mood.

Most of the main indices have dropped, although the UK's FTSE 100 has scrambled a little higher.

London's blue chip index is starting the shortened trading week with some limited gains, helped along by the fact that markets appear increasingly confident that if the Federal Reserve do hike rates again next month, the US economy is now looking strong enough to cope with the fallout.

8.45am BST

China's stock market has enjoyed its best day since February.

The CSI 300 index closed 3.4%, driven by predictions that the market could soon be included in the MSCI Emerging Markets index (a move which could encourage international investors to hold Chinese shares).

"Liquidity in the market is really thin at the moment," Fang Shisheng, Shanghai-based vice general manager at Orient Securities Futures Co., said by phone.

"So the market will very likely see big swings if a big order comes in. The order looks like it's from a hedger."

That unexplained drop this Tuesday in China CSI 300 futures.... https://t.co/gfErVgDtcA pic.twitter.com/u0NIBpYrjc

8.27am BST

German consumers kept their hands in the pockets last month, fuelling concerns that Europe's largest economy may be in the doldrums.

German retail sales fell -0.9% m/m in Apr after drop of -1.4% in Mar despite employment hit all-time high at 43.43mn pic.twitter.com/ORQO8hQPRc

8.06am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There's a somewhat gloomy feel to the City of London, as traders trudge back to their desks after the bank holiday weekend.

European markets set for a slightly positive open following equity rally in Asia#FTSE +3pts at 6274#DAX +27pts at 10360#CAC +6pts at 4535

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