US economy created 227,000 new jobs in January, as jobless rate rises to 4.8% -as it happened
Rolling coverage of the first American employment report since Donald Trump became US president
Earlier:
- Reports: Trump taking aim at Dodd-Frank regulation
- Fiduciary rules to protect pensioners could be stalled
6.19pm GMT
Financial shares were boosted by the prospect of Donald Trump rowing back on regulation, while a rise in the oil price after new US sanctions on Iran lifted energy stocks. So markets moved sharply higher, with the FTSE 100 recording its best one day rise so far this year. Even a fall in mining shares as China raised interest rates could not undermine the positive mood.
Better than expected US jobs figures also gave some support, pushing Wall Street higher and the Dow Jones Industrial Average back through the 20,000 level. The final scores in Europe showed:
5.41pm GMT
President Trump's action on financial regulation is imminent it seems:
US Pres Sec. Spicer: Trump To Sign Executive Action On Dodd Frank Around 18:00 GMT
4.29pm GMT
Oil prices are higher as the US unveiled a number of new sanctions on various companies and individuals following a recent missile test. Reuters reports:
The United States on Friday sanctioned 13 individuals and 12 entities under its Iran sanctions authority, days after the White House put Tehran "on notice" over a ballistic missile test and other activities.
In a statement on its website, the U.S. Treasury listed the sanctioned individuals and entities, some of which are based in the United Arab Emirates, Lebanon and China.
3.45pm GMT
There is a fine line to tread when making changes to Dodd-Franks, said Jasper Lawler, senior market analyst at London Capital Group:
Reports that Donald Trump is preparing to scale back financial regulations in the US is a boon for multinational 'megabanks' which have seen profits drop since the heady days before the 2008 financial crisis.
Shares of Visa, Goldman Sachs and JP Morgan were all atop the US benchmark. There was observable shareholder glee that an era of ever-expanding regulation could be coming to an end under Donald Trump.
3.25pm GMT
President Trump is meeting with business leaders and it appears the plans for the financial sector are on the agenda:
US Pres. Trump: To Discuss Dodd-Frank, Banking Industry With Business Council Members - RTRS
3.13pm GMT
Unlike the Markit survey, another report on the services sector has come in below expectations, although still showing a strong performance.
The ISM non-manufactuing PMI was 56.5 in January, virtually flat on the 56.6 recorded the previous month and slightly below expectations of a figure of 57.
3.07pm GMT
Back with the Dow, and it is clear that the financial sector is on the rise thanks to the idea that Donald Trump will row back on regulation:
2.53pm GMT
The first of two surveys of the US service sector has shown a better than expected performance last month.
The Markit service sector PMI for January came in at 55.6 compared to an initial estimate of 55.1 and December's figure of 53.9. This was the highest reading since November 2015.
The US economy has started 2017 on the front foot. Business activity across the economy is growing at the fastest rate for over a year and optimism about the business outlook has risen to the highest for a year and a half.
The January surveys signal annualized GDP growth of approximately 2.5%, setting the scene for a solid first quarter. With January seeing the largest inflow of new business for 18 months, there's good reason to believe that firms will be even busier in coming months.
2.44pm GMT
US markers are on the rise after the better than expected headline jobs figure, with financial companies also benefitting from the prospect of looser regulation if Donald Trump scraps the Dodd-Frank legislation.
The Dow Jones Industrial Average is currently up 96 points or 0.48% while the S&P 500 opened 0.4% higher and the Nasdaq Composite 0.26% better.
2.15pm GMT
The mixed picture from the non-farm figures - positive jobs numbers, weaker than expected wages growth - also saw some volatility in the currency markets as traders tried to work out the implications for US interest rates. Kathleen Brooks, research director at City Index, said:
The dollar initially reacted positively, however, within minutes the dollar index backed off highs as the foreign exchange market took stock of some of the weaker elements of the report. US stock market futures moved higher and are predicting a stronger open for the Dow, S&P and Nasdaq. However, the bond market was less impressed, and US treasury yields fell across the curve, the two-year yield is currently down 5 basis points, which could weigh on the buck further on Friday.
We don't think that today's non-farm payrolls report, on its own, will be a game changer for the Fed, and the market is still pricing in the prospect of another rate hike from the Fed by mid-year; after all wage growth at 2.5% is still above the Fed's target inflation rate. However, we will be watching the development of wages, which are a key metric for the Federal Reserve going forward. If they don't pick up again for February then Federal Reserve rate hike expectations may start to get pushed further out to the second half of 2017, which could limit dollar upside in the medium term.
2.14pm GMT
The yield, or interest rate, on US government bonds has fallen since the jobs report came out.
Traders are betting that the weak wage growth last month means the Fed is even less likely to raise interest rates in March.
Expectations for March Fed hike drop to 12%, from 20%.
(via @pattidomm) @CNBC
Free headline: Trump Trade Trounced pic.twitter.com/4ykYwBJXsz
2.09pm GMT
Wall Street and City economists broadly agree that today's US jobs report shows America's economy remains robust, although the mediocre wage growth is a disappointment.
The 227,000 rise in non-farm payrolls in January suggests that the labour market started the year on a reasonably solid footing. However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June.
"Today's jobs numbers coupled with most other economic data points this week demonstrate the ongoing resilience and strength of the US economy.
The figures also corroborate the findings of the Atlanta Fed Wage Growth Tracker, which has generally continued on an upward trend over the last quarter. This is a further indicator of both momentum in the wider domestic economy and that a tighter job market is boosting job security and overall pay.
The US NFP data has confirmed that the lavish party in the employment sector is still somewhat solid, especially if you look at the headline number. You can say that it was a super solid number because it was well ahead of expectations. This week we had a number disappointing news with respect to what traders were expecting, for instance, the Bank of England's event.
It is not all good news when it comes to the US jobs number because if you peel the layers, it shows that the downside surprise is in the wage report and a lot of disappointment there. We still need to see more readings before we can see that there is a trend because this number is full with noise.
Bottom line: Jobs numbers confirm the US economy is still motoring along nicely at a good clip-fast enough to keep pushing unemployment down
The big question remains how much slack remains in the labor market, and how many folks we can pull back into the labor force.
Continued improvement in the labor market in the U.S. strengthens the case of the Fed remaining on course to gradually tighten monetary policy in the coming months. Even though last month's job growth was strong, the FOMC will be cautious in tightening monetary policy because of considerable uncertainty about economic policy and global conditions.
A key challenge for the new administration will be to lift growth in both workers' compensation and labor productivity. Infrastructure spending, lower taxes, business friendly attitude, and more streamlined regulations would be beneficial to the economy. However, higher tariffs, restrictive immigration policies, protectionism, lack of action on global climate change, and various erratic policies would be harmful.
Today's Non Farms print was as strong as last month's was disappointing, yet the reflex dollar rally was quickly given back as traders cast their eyes through the detail of an underwhelming overall jobs report.
Seasonal challenges relating to January data should be taken into account, yet the fall in average earnings to 0.1% and a rise in the unemployment rate to 4.8% might cause a slight stir across the FOMC, who just this week expressed their comfort with the labour sector. A binary assessment of upcoming Fed decisions would point to a minimal but negative impact to rate expectations, yet the stronger message to emerge is that US businesses confidence is on the rise and, in the process, already helping Trump towards his 4% GDP target.
2.06pm GMT
I've grabbed some nice charts off Bloomberg TV, showing how today's jobs report compared to Wall Street's forecasts....
1.50pm GMT
Here's our US business editor, Dominic Rushe, on today's jobs report:
The US added 227,000 new jobs in January, the last month of the Obama presidency and the first of Donald Trump's, the Department of Labor announced on Friday.
The closely watched figure was the best since last June and comes after Trump won the election promising jobs growth and pushing US companies to employ American citizens, threatening to tax imports of goods made outside US borders.
Related: US economy adds 227,000 jobs in January - the best figures since June
1.48pm GMT
Another reason to be worried about US earnings:
"Over the year, average hourly earnings rose by 2.5% in January, compared with 2.9% year over year last month." - @WSJecon
1.48pm GMT
Here's some instant reaction, first from bond trading magnate Bill Gross:
"I suppose it's good for corp, profits", says Gross @BloombergRadio. But ultimately it's the consumer drives the economy. YoY wage revision
So strongish January jobs report, 227,000 jobs. Labor participation, emp-pop both up 0.2 - though an * b/c of population adjustment
Key thing about this report is modest wage growth and jump in LFPR suggest no reason for the Fed to accelerate its hike schedule.
The theme of employment growth with wage growth underperforming just repeats and repeats in the credit crunch era doesn't it? #NFP
1.43pm GMT
America's labour force participation rate, which measures everyone working or available for work, has risen to 62.9% from 62.7%.
That implies that some economically inactive people started looking for work again last month (and is one reason the jobless rate rose to 4.8%).
Labor Force Participation Rate rises from 62.7% to 62.9% pic.twitter.com/yae7COyB1q
1.41pm GMT
The number of Americans who would like to work more hours went up last month.
The U6 rate, which measure unemployment and underemployment, has risen to 9.4% from 9.2%.
U3 Unemployment Rate 4.8% vs 4.7% exp/prev.
U6 UER 9.4% vs 9.2% prev.
Avg Hourly Earnings +2.5% YoY vs 2.7% exp/2.9% prev.
1.35pm GMT
November's jobs report has been revised, to show that only 164,000 new jobs were created, not 204,000 as first thought.
December's data has been revised up by 1,000, to 157,000.
1.34pm GMT
The wages figure is a disappointment!
Average earnings only rose by 0.1% month-on-month in January, dashing hopes of a 0.3% gain.
Average hour earnings up 0.1% in January vs. 0.3% expectations. YOY wages up 2.5% #JobsReport https://t.co/DClcu4FCnl
1.33pm GMT
America's jobless rate has risen to 4.8%, from 4.7% in December.
1.30pm GMT
BREAKING: America's economy created 227,000 new jobs in January, as the Obama administration ended and the Trump administration began.
That's more than economists had expected, and suggests that the US economy began 2017 in good health.
1.25pm GMT
Tension is building, with just five minutes to go....
Today begins Trump's long road to fulfilling his promise of 25 million (!) new jobs. Need 208.3 thousand every month
This jobs report predates Trump. Reference week for the numbers is January 12th. https://t.co/4sF3ickjTM
The first jobs report of the Trump presidency comes out in less than 10 minutes. Reminder that he thinks the unemployment rate is "phony."
1.12pm GMT
It's nearly time for the US jobs report.... the first Non-Farm Payroll on Donald Trump's watch.
Of course, Trump only took office on January 20th, so he can't be credited or blamed for the state of America's labo(u)r market. Of course, some firms will have made hiring decisions since the election on 9th November, but the impact of Trump's policies will only be seen in NFP reports later this year and beyond.
Obama gets 2/3 of today's jobs report right? https://t.co/WHeYk8DWvg
12.47pm GMT
The Daily Telegraph have just published a handy explanation to the Dodd-Frank legislation.
Here's a snippet:
Why does Donald Trump want to repeal the Dodd-Frank rules on banks and finance? https://t.co/RGhWxZjEm0 pic.twitter.com/MQpxx2Dccw
12.17pm GMT
It's that time of the day when the US president wakes up, opens Twitter, and addresses the world....
Meeting with biggest business leaders this morning. Good jobs are coming back to U.S., health care and tax bills are being crafted NOW!
Related: Uber CEO steps down from Trump advisory council after users boycott
11.51am GMT
In other banking news, Deutsche Bank is planning to cut 17% of its equities staff and 6% of its fixed-income staff globally, according to the Wall Street Journal.
It would be the latest stage in CEO John Cryan's push to cut costs and return the company to profit (it reported a $2bn loss yesterday).
Deutsche Bank set to slash equities, fixed-income jobs https://t.co/z3y6xT6pMW
11.40am GMT
Earlier today, China's government rejected claims from the Trump administration that it unfairly manipulates its currency.
Government spokesman Lu Kang told reporters in Beijing that China hopes to resolve concerns over global trade through talks, not through tit-for-tat devaluations.
China has never and won't use a currency war to seek advantage in trade or to raise competitiveness in trade.
We have no intention of fighting a currency war. From a long-term perspective this is not beneficial to China.
*SCHAEUBLE: SOME IN U.S. NOT AWARE GERMAN GOVT NOT SETTING RATES
10.56am GMT
Mining shares are falling after China's central bank raised short term interest rates overnight.
That is holding back the FTSE 100, which is up 30 points thanks to the Trump-induced rally in bank shares.
The mining sector has slipped back this morning after a disappointing Chinese manufacturing survey as well as slight tightening of money market rates by Chinese authorities. It's not immediately clear what prompted this action, though there is speculation about rising concerns about a property bubble, and this slight rise could well be an attempt to warn that tighter policy is on the way. Glencore, Antofagasta, BHP Billiton, Anglo-American PLC and Rio Tinto have all slipped lower at the open.
On the upside banking shares have gained a lift on speculation that US President Trump may well sign a new executive order to roll back some of the Dodd Frank regulatory bill, helping push Barclays and RBS higher.
10.37am GMT
Shares in banks and insurance groups are rallying in London, following the reports that president Trump will take steps to dismantle regulations brought in to prevent another financial crisis.
The prospect of Trump blocking president Obama's fiduciary rules also seem to be boosting demand for financial stocks. They were due to come into force in April, compelling financial advisors to recommend the best product to clients, not simply a suitable one.
UK bank stocks are higher across the board this morning, after the magic words 'Dodd-Frank' and 'repeal' flashed across screens last night; leaving aside the political implications, the news could provide a tonic for the sector.
Gary Cohn, the former Goldman Sachs executive who is now director of the White House's National Economic Council, said Mr Trump would sign executive orders preparing the way to fulfil a campaign pledge to dismantle parts of Dodd-Frank.
However, the president's ability to pull apart the sweeping reforms on his own is limited. Only Congress can make major revisions to the act it passed in 2010, but Mr Trump can use the orders to signal his priorities and instruct regulators enforcing the law.
9.57am GMT
Economists are concerned that Britain's service sector slowed last month. Here's some early reaction:
"The most notable aspect of the Services PMI was the ongoing strength of the input prices index, which rose again and is now above 60 level for the fourth consecutive month. Higher input prices will, in time, shift into selling prices otherwise firms will see their profits shrink. In line with the Manufacturing and Construction PMI, this points to inflation continuing its recent surge in the months ahead.
"Headline activity, although falling back slightly, suggests the economy is continuing to expand at a healthy pace, but one has to question its sustainability. Can the UK economy keep pace as inflation erodes the spending power of the consumer? We don't share the Bank of England's optimism that households will continue to whittle away their savings to support spending. Our conviction strengthened today with the softer outlook for employment highlighted in this survey."
Services have been the key UK growth driver along with consumer spending and January survey evidence for both has been softer. While these are surveys rather than hard data and not too much should be read into one month's figures, it nevertheless fuels our suspicion that the UK economy will find life increasing difficult during 2017 and that growth will gradually lose buoyancy like a slow puncture.
"There are some helpful economic ingredients that are keeping the PMI in positive territory. Healthy levels of employment and low interest rates mean consumers continue to spend. Business confidence has also been buoyed by a stronger than expected economic performance in 2016, and is likely to be further boosted by yesterday's improved growth forecast from the Bank of England.
"However, some uncertainty remains and we're seeing a cautious approach towards making major investment decisions across the services sector."
9.40am GMT
Newsflash: Britain's service sector grew slower than expected last month, as firms were hit by rising prices.
The Services PMI, which tracks activity in the dominant part of the UK economy, dropped to 54.5 for January from 56.2 in December, a bigger slowdown than expected.
UK service sector growth slows more than expected in January. PMI posts biggest fall since July, second biggest in a year.
The 3 UK #PMI surveys show companies' costs are rising at the joint-fastest rate since the global financial crisis pic.twitter.com/wOVzjoqiIv
9.29am GMT
Bad news for UK energy customers... Npower has just announced it will raise the cost of its dual fuel package by almost 10%.
The move will hurt around half of its customers, putting 100 on the average annual bill. And where one energy firm leads, the others tend to follow...
The first of the Big 6? NPower is raising a typical dual fuel annual energy bill by 9.8% or 109.
#Npower blames rising wholesale prices & cost of delivering g'ment policies incl smart meters, renewables, cap market.@beisgovuk @ofgem
Ouch! Npower hiking dual fuel bills by 9.8% or 109 a year on ave. And where one Big Six provider goes, they all follow. #brrr
9.26am GMT
Investors often flock to gold in time of nervousness. And Donald Trump's election win has helped to push demand for bullion up to its highest level since the eurozone debt crisis was raging.
Related: Demand for gold hits four-year high after Brexit and Trump votes
9.12am GMT
Good news! The Eurozone's service sector has kept growing at the fastest pace in five and a half years.
Markit's service sector PMI, which tracks activity across the sector, has just come in at 54.4 for January, matching December's reading - the highest since mid-2012. That shows robust growth, with job creation hitting its fastest rate since 2008.
Markit #Eurozone #PMI Composite Output Index unchanged at 54.4 in Jan'17. Job creation fastest since Feb'08. https://t.co/8l5aV5qnPW pic.twitter.com/fRPujteWVD
Although Germany has decelerated somewhat in the recent months, today's PMIs are clearly pointing to accelerating GDP growth in the Eurozone in 2017. In addition, the rate of job creation - the fastest since February 2008 - indicates that this momentum could be sustained in the coming months. Going forward, it will be important to keep an eye on cost pressures which continue to intensify. The companies' ability to pass these higher costs onto consumers will be critical to support margins and the earnings recovery we anticipate.
8.59am GMT
President Trump makes the front page of this week's Economist:
The Economist front page pic.twitter.com/YBhQhMMBYM
WASHINGTON is in the grip of a revolution. The bleak cadence of last month's inauguration was still in the air when Donald Trump lobbed the first Molotov cocktail of policies and executive orders against the capital's brilliant-white porticos. He has not stopped. Quitting the Trans-Pacific Partnership, demanding a renegotiation of NAFTA and a wall with Mexico, overhauling immigration, warming to Brexit-bound Britain and Russia, cooling to the European Union, defending torture, attacking the press: onward he and his people charged, leaving the wreckage of received opinion smouldering in their wake....
8.54am GMT
Donald Trump's shock election victory has been "marginally" good for the UK economy, according to one of the Bank of England's top officials.
"You've seen business confidence rise particularly in the United States. You've seen financial markets get more optimistic and I think that has had some impact on us.
"So far, at the margin, yes, it's been positive for global sentiment, and for that reason, and to that extent, for us as well."
"And I should say overall that... there's a lot we have yet to see about the detailed plans, including those for fiscal policy, for government spending and taxes and so forth, so we'll have to wait and see."
8.43am GMT
Laurie Macfarlane of the New Economics Foundation is concerned that removing financial regulations could lead to trouble:
This all sounds familiar https://t.co/xWp4GMl7bx pic.twitter.com/RPEsf4DzjE
There are many who wld welcome roll back of #doddfrank but will pendulum swing too far the opposite way?
Lawyers likely loving Trump admin review/rollback of #doddfrank - yet further years of work guaranteed #suegrabittrunne
Big day for US markets with #NFP numbers and @realDonaldTrump to roll back Dodd-Frank - US financials could jump.
8.21am GMT
President Trump will meet with the bosses of some of America's largest financial firms today, before signing executive orders to review Dodd-Frank and stall the Obama fiduciary rule.
He's expected to see Blackstone CEO Steve Schwarzman, Blackrock boss Laurence Fink and JP Morgan's Jamie Dimon, among others
The two executive actions are designed to lay out the Trump administration's approach to financial markets, with an emphasis on removing regulatory burdens and opening up investor options, said the White House official, who briefed reporters on condition of anonymity.
8.03am GMT
Some breaking news from America.... US president Donald Trump is expected to start unpicking some of the rules created after the 2008 crisis to to rein in the financial sector.
"Americans are going to have better choices and Americans are going to have better products because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year.
"The banks are going to be able to price product more efficiently and more effectively to consumers."
Trump plans to dismantle much of the regulatory system put in place after the financial crisis https://t.co/UcQYkyBv7W
Busy day ahead with exec orders said to be coming to roll back Dodd-Frank, cancel fiduciary rule, water down gun owner background checks...
7.35am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Donald Trump once promised to be "the greatest jobs president God ever created". And today we'll find out whether his rise to the White House has had any impact on the US labour market yet.
This would suggest that the 180k estimate being predicted is probably too low, with a figure in excess of 200k not being beyond the realms of possibility. Such a high number given an unemployment rate of 4.7%, would suggest that there is probably still a fair degree of slack in the jobs market.
Wages are also likely to be closely watched with a rise of 0.3% expected, with an annualised rise of 2.8%, down slightly from December's 2.9%.
#US non-farm payroll out tonight. #Jobs expected up by 175k for Dec. A large miss could lead to weakness in #USD, #stocks. #MAGA #Trump
Our European opening calls:$FTSE 7143 up 3
$DAX 11638 up 10
$CAC 4797 up 3$IBEX 9412 up 6$MIB 18925 up 36