US jobs growth much worse than expected; Greece and EU creditors agree deal - as it happened

Nick Fletcher

from on 2017-04-07 13:50 (#2JD10)

2.50pm BST

With a combination of the US attack on Syria and much weaker than expected jobs numbers for March, it is no surprise that Wall Street has got off to a cautious start.

But there is no real panic selling, and after an initial dip the Dow Jones Industrial Average is now just about in positive territory, up 5 points or 0.03% . The S&P 500 opened down a mere 0.09% and the Nasdaq Composite is marginally ahead.

2.11pm BST

US markets look like they may well shrug off the disappointing jobs figures:

Dow currently looking set to open only around 30 points lower after lower than expected jobs data.

2.09pm BST

Back with Greece and after eurogroup head Jeroen Dijsselbloem confirmed their had been discussions with the International Monetary Fund this week, comes a reasonably upbeat statement from that very organisation. IMF spokesperson Gerry Rice said:

There has been important progress in recent weeks. A number of policy issues remain outstanding. But we are at a point where we think there are good prospects for successfully concluding discussions on these outstanding policy issues during the next mission to Athens. Such an agreement on policies will have to be followed by discussions with euro area countries to ensure satisfactory assurances on a credible strategy to restore debt sustainability, before a program is presented to the IMF Executive Board.

2.04pm BST

Here's our report on the disappointing jobs figures:

The US economy added just 98,000 jobs in March as a cold snap, a government hiring freeze and a faltering retail sector appear to have put the chill on president Donald Trump's promise to boost hiring.

The jobs market had got off to a flying start in 2017, adding an average of 236,500 jobs a month. February's jobs report was the first under Donald Trump and was seized upon by the president as evidence that his promise to bring back US manufacturing jobs was coming true.

1.57pm BST

The non-farms report does not really give a clear message on the state of the US economy, says James Knightley at ING Bank:

The headline from the US jobs report is the big miss on payrolls, which rose only 98,000 versus expectations of a 180,000 rise. We had been looking for a soft figure, but certainly not this poor. We reasoned that unseasonably warm weather had helped boost construction activity and jobs in January and February (when building sites often typically shut down), so we wouldn't get the usual bounce in March and this does appear to have happened - construction jobs rose 34k in Jan and 58k in Feb, but only 6k in March.

However, there was some real disappointment in retail trade, which saw employment fall 30k after a 31k drop in February while transport services also saw two consecutive monthly falls (-27k in March after -16k in February). This seems to tally somewhat with weaker consumer spending data and is something worth watching.

1.52pm BST

Here's some reaction to the weak US jobs numbers:

1.44pm BST

The 98,000 jobs added in March was the lowest figure for ten months, with the retail sector shedding workers for the second month in a row.

But the unemployment rate fell form 4.7% to 4.5%, said the Bureau of Labor Statistics, the lowest level since May 2007.

1.32pm BST

President Trump may be putting a lot of emphasis on job creation, but the widely watched non-farm payroll figures for March have come in much lower than expected.

In all 98,000 jobs were added last month, well down on the forecast 180,000. And February's figure was revised down from 235,000 to 219.000 while January was cut from the initial 238,000 to 216,000.

1.17pm BST

Back with the UK, and the National Institute for Economic and Social Research says weak retail sales hit GDP growth in the first quarter.

Its monthly estimates of GDP show output grew by 0.5% in the three months to the end of March, unchanged from the three months to February. In the final quarter of 2016, growth was 0.6%. NIESR's James Warren said:

We estimate growth slowed slightly in the first quarter of 2017 to 0.5 per cent. A key component of this moderation has been relatively weak retail sales in the first two months of this year. Consumption is expected to moderate further this year as increasing inflation erodes households' purchasing power. We expect the Bank of England to look through this temporary shock to inflation and for monetary policy to remain accommodative.

Our monthly estimates of #GDP suggest that output grew by 0.5% in 2017Q1 - Read more here:#NIESRGDP https://t.co/amRe2LiVfB pic.twitter.com/89QkRaXbpw

1.00pm BST

Over in Athens protestors aligned with the communist party workers' union, Pame, are already gearing up for action announcing mass protests nationwide, writes Helena Smith.

The labour organisation has called on workers nationwide to take to the streets. A mass demonstration will be held outside the Greek parliament later this afternoon with some protests also taking place on far-flung Aegean islands such as Ikaria tomorrow.

"The government has agreed to further butcher the labour and social security rights of workers," Pame said in a statement adding that the new measures had been drafted in cahoots with industrialists, the European Union and hated International Monetary Fund.

12.35pm BST

And more from Dijsselbloem following the meeting:

Mission teams can return to Athens for further technical work and to reach full staff level agreement as soon as possible #Greece #eurogroup

After staff level agreement is reached #eurogroup will come back to the issue of medium term fiscal path and debt sustainability #Greece

12.30pm BST

And here's the eurogroup statement on Greece:

The Eurogroup was briefed on developments in the intense talks between the European Commission, the European Central Bank, the International Monetary Fund and the European Stability Mechanism and the Greek government over the past month.

The institutions and the Greek authorities reached an agreement on the main elements of policy reforms required to move ahead with the second review of the current macroeconomic adjustment programme, which is necessary to unlock further financial assistance to Greece. This agreement refers to the size, timing and sequencing of the reforms.

#Eurogroup Main results now online https://t.co/5BrQluKyBP #Greece

12.28pm BST

Senior officials in Athens are saying whatever deal was agreed at the eurogroup meeting in Malta today, agreement must now be put to the Greek parliament for a vote " which is where things may get testy. Helena Smith reports:

The Greek finance minister Euclid Tsakalotos and prime minister Alexis Tsipras will now need all their persuasive powers to ram whatever measures have been agreed with creditors through parliament. In recent weeks, leading figures in Syriza, the governing left-wing party, have voiced deep disgruntlement over the concessions Tsakalotos has had to make to wrap up the compliance review at the heart of Athens' latest standoff with creditors.

Tsakalotos, addressing reporters in Malta, was quick to give a hint of the disquiet that lies ahead saying: "There are things that will upset the Greek people."

Speaking to the Guardian, the Interior Minister, Panos Skourletis, an outspoken critic of the austerity Greece has had to accept in exchange for emergency bailout funding, said much would depend on the "final picture" that emerged.

The measures, he said, would likely be put to parliament (in the form of emergency legislation) after Easter.

12.24pm BST

Inspectors representing creditor institutions will return 2 #Greece Monday, sources say. Measures likely 2 b put to parliament after Easter

#Greek fin min addressing reporters after latest measures 4 cash deal announced: "There r things [in it] that will upset the Greek people."

12.07pm BST

*TSAKALOTOS: BAILOUT TO END 2018, GREECE TO RETURN TO NORMALCY

11.54am BST

The eurogroup press conference is over, but Greek finance minister Euclid Tsakalotos is now speaking:

*TSAKALOTOS: TODAY WE HAD AN AGREEMENT

*TSAKALOTOS: LIKE ALL DEALS, THIS ONE INCLUDED COMPROMISES - POST-2018 AUSTERITY MEASURES WILL BE LEGISLATED NOW

11.39am BST

Despite the optimism Dijsselbloem warned time was still running out:

The situation in Greece is not improving, it is all our faults, we are taking too long, the momentum is slipping away. We need to get it done well in time for the next Greek payment.

11.33am BST

Eurogroup's Dijsselbloem: Once Reform Package Is Finalised, Will Agree On Greek Primary Surplus Targets For Coming Years - RTRS

*DIJSSELBLOEM: AGREEMENT ON 2020 MEASURES IN PRINCIPLE - DIDN'T DISCUSS MID-TERM GREEK FISCAL PATH

11.31am BST

Jeroen Dijsselbloem is asked whether the International Monetary Fund, which has been reluctant to join further bailouts without debt relief, agrees with this result.

He says there have been talks with the IMF and he couldn't have made this announcement without agreement.

There is nothing withholding the mission going back, we have solved all the big issues. It is very important they go back.

11.21am BST

Comments on Greece at the eurogroup press conference from European Commissioner for Economic and Financial Affairs Pierre Moscovici:

.@pierremoscovici on #Greece: The mission will go back very soon to Athens, I believe that the timing is right to put an end to uncertainty

ECB's Coeure: Agreement On Greece To Pave The Way For DSA - RTRS

11.11am BST

An agreement between Greece and its creditors on overarching reforms has been reached. Further work will continue in the coming days and inspectors will return to Athens as soon as possible, according to eurogroup head Jeroen Dijsselbloem.

At presser #eurogroup: Agreement on main overarching elements of the policy package, in terms of size, timing and sequencing #Greece

Dijsselbloem says there is agreement on 2% of GDP in fiscal measures and expansionary counter-measures #Greece will be able to implement

10.54am BST

The eurogroup press conference will be transmitted live here when it starts.

10.53am BST

Well, that was quick:

#Eurogroup is over @tsakalotos in the press room #maltaeu2017

10.27am BST

Here's our full story on Carney's speech:

10.10am BST

The Bank of England governor has made an impassioned plea for politicians not to give into protectionism on banking rules when negotiating Britain's exit from the EU but to keep an open financial system.

A week after prime minister Theresa May triggered article 50, formally beginning the process of the UK withdrawing from the EU, Mark Carney used a speech on the financial system to challenge those who want to cut the UK's access to the rest of Europe after Brexit.

Full BoE Carney speech: https://t.co/itRbNEBbOH ... quick read doesn't seem like anything major on economy or policy

10.08am BST

The UK figures point to a slowdown in GDP growth, says Howard Archer of IHS Markit:

A disappointing package of data for the UK economy which fuels suspicion that GDP growth slowed markedly, largely due to consumers becoming more cautious. We suspect UK GDP growth in the first quarter of 2017 slowed to 0.4% quarter-on-quarter from 0.7% quarter-on-quarter in the fourth quarter of 2016 - this would be the weakest growth rate since the first quarter of 2016.

Industrial production and (especially) construction output fell back appreciably in February while the trade deficit widened, admittedly partly due to erratic items lifting imports.

10.03am BST

Britain's unseasonably warm weather in February is being partly blamed for the fall in industrial production.

The Office for National Statistics said:

The monthly decrease in electricity and gas was largely due to falls in both electricity generation and in the supply and distribution of gas and gaseous fuels; this was largely attributable to the temperature in February 2017 being 1.6 degrees Celsius warmer than average.

Industrial production fell by 0.7% m/m in February, led by utilities which fell amid unseasonably warm weather. https://t.co/fq2zk8V8tS pic.twitter.com/Vay6JIn9si

9.59am BST

Here's Reuters on the UK data:

British industrial output fell unexpectedly in February and manufacturers struggled, according to official data on Friday that added to signs economic growth may have slowed as Britain prepares to leave the EU.

Industrial output fell 0.7 percent in February, worse than all forecasts in a Reuters poll of economists that pointed to a 0.2 percent increase and following a 0.3 percent decline in January.

UK industrial output shrinks unexpectedly in February, adding to signs of slowdown - https://t.co/dgtLFnBsha

9.54am BST

There are also some poor UK construction figures, with output falling 1.7% month on month in February, the biggest drop in almost a year. Year on year, construction output rose just 0.5% compared to expectations of a 1.9% increase.

9.51am BST

Here's how the trade gap is widening, with the goods deficit unexpectedly hitting a five month high:

9.41am BST

Sterling has fallen back after the weak UK data, with the prospect of a change to the Bank of England's current low interest rate policy receding.

The pound fell to $1.2429 against the dollar before recovering slightly to $1.2438, down 0.22%. Ipek Ozkardeskaya of London Capital Group said:

UK's manufacturing and industrial production unexpectedly contracted for the second month in a row.

Soft data revived the Bank of England doves and backed the idea that the inflation alone may not be a sufficient reason to raise the interest rates in the UK.

9.36am BST

BREAKING NEWS:

Some disappointing numbers from the UK, with industrial production surprisingly falling by 0.7% month on month in February compared to expectations of a 0.2% increase and a 0.4% decline in January. The year on year rise was 2.8%, lower than the forecast 3.7%.

9.16am BST

So far, and despite Russia saying the US air strike on Syria soured relations between the two superpowers, markets remain calm.

The FTSE 100 is virtually flat, down just 0.08% while most European markets are lower but not too dramatically so. And the US market seems to be shrugging off the conflict as well, to judge by the futures market:

Despite #SYRIA strike, US futures act like it's just another day at the office. S&P, $DJ, $NDX dn 0.1%. #DAX worst off in Europe, -0.5% ^KO

8.48am BST

Signs of a slowdown in the UK housing market.

UK house prices in the three months to March were 3.8% higher than a year ago, according to the Halifax, although this was down from the 5.1% figure recorded in February and was the lowest rate since May 2013.

The annual rate of house price growth has more than halved over the past 12 months. A lengthy period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand.

Nonetheless, the supply of both new homes and existing properties available for sale remains low. This, together with historically very low mortgage rates, is likely to support house price levels over the coming months.

March's flat Halifax house price data - following on from lower Nationwide data and the Bank of England reporting a dip in mortgage approvals in February - fuels our belief that the housing market is being increasingly affected by the increasing squeeze on consumers and their concerns over the outlook.

Markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on housing market activity and house prices. However, a shortage of supply is likely to put a floor under prices.

8.35am BST

Let's not forget that President Trump is also occupied with meeting his Chinese counterpart Xi Jinping. According to Xinhau News Xi has said he is ready to work with Trump to boost China-US ties.

#BREAKING: #XiJinping says ready to work with #Trump to boost China-U.S. ties from new starting point pic.twitter.com/oqFwm8wTvn

#BREAKING: #XiJinping urges pushing forward China-U.S. cooperation in investment, infrastructure, energy pic.twitter.com/GOhwBU09ds

#BREAKING: "A thousand reasons to make China-U.S. relationship work, no reason to break it," #XiJinping tells #Trump pic.twitter.com/vl2VXj3xxE

8.18am BST

As the eurogroup of finance ministers meet to discuss Greece, there seem to be some hopeful signs that an agreement could be on its way. Eurogroup head Jeroen Dijsselbloem has said ahead of the meeting that it has achieved results on Greece although there will not be a total political deal today.

.@VDombrovskis #Dijsselbloem: We have achieved results [on #Greece], I will report to #Eurogroup what results we have achieved.

.@VDombrovskis #Dijsselbloem: I'm in a 'positive mood' [on #Greece].#Eurogroup

#EU Commission's @VDombrovskis: We expect significant progress at today's #Eurogroup that will enable the return of institutions to Athens.

.@VDombrovskis #Austria FinMin Schelling: We have 'good progress' on #Greece.#Eurogroup

.@VDombrovskis #Germany FinMin Schiuble: Unsure if a greement on #Greece can be reached today; differences between institutions remain.#Eurogroup

8.07am BST

As expected the uncertainty triggered by the US air strikes on Syria has sent European markets lower, but there is by no means panic.

The FTSE 100 is currently down just 5 points or 0.06% .while France's Cac, Germany's Dax and Spain's Ibex opened 0.4% lower.

#Gold & #oil stocks trading higher at the European open pic.twitter.com/9Zx0XvgOer

7.59am BST

The US may be in the headlines at the moment for the attack on Syria, but as mentioned previously, there is some key economic data out later in the form of the latest jobs figures.

Analysts are expecting US non-farm payrolls to show a rise of 185,000, a drop from February's 235,000. But there is a chance the figure could be much higher, to judge from this week's private sector jobs data from ADP. That report showed a better than expected 263,000 number, and while the correlation with non-farms is not consistent, it could mean there could yet be a surprise on the cards. CMC's Hewson again:

Over the last few months there hasn't been much more than a 50,000 gap between the two since October last year, which suggests that we'll likely see a fairly strong number above 200,000, maybe in the region of 230,000.

7.46am BST

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

Donald Trump's decision to authorise airstrikes on Syria after this week's chemical attack has understandably spooked markets. With growing tensions between the US and China over North Korea after the country launched another missile this week, signs that the US could also be at odds with Russia over Syria has added to the unease. Michael Hewson at CMC Markets said:

Today's military action against Syrian airfields after this week's chemical gas attack, shouldn't have been a surprise after Secretary of State Tillerson's remarks that recent events required a "serious response" however the timing was, coming so quickly afterwards. The action adds a complexity to geopolitics that wasn't there before given Russia's support for Syria and Trumps pre-election pledges to try and repair relations with Putin.

The US would now appear to be on a collision course with Russia as Tillerson went on to add that there was no prospect that Assad could remain Syria's leader in light of the use of chemical weapons, and markets in Europe are likely to reflect this escalation in tensions with a lower open and higher gold prices as safe haven assets attract capital flows.

Our European opening calls:$FTSE 7290 down 14
$DAX 12194 down 37
$CAC 5110 down 11$IBEX 10499 down 20$MIB 20246 down 51

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