Wall Street and FTSE 100 hit new highs as bull market shakes off US jobs report - as it happened
Shares keep rallying even though the latest American Non-Farm Payroll is mediocre, with fewer new jobs created than expected
- Summary: Market melt-up continues
- Wall Street up again!
- Breaking: US created 148,000 jobs in December, fewer than expected
- Retailers cut 20,000 jobs
- Wages rose by 2.5% per year, as forecast
- Unemployment rate sticks at 4.1%, a 17-year low...
- but underemployment has risen
10.02pm GMT
And finally.... the Dow Jones has continued to 'melt-up' with aplomb.
8.40pm GMT
Hello again. Marketwatch has an interesting explanation for the market rally:
Investors are feeling good about the U.S. stock market. In fact, they haven't felt this good in years.
The latest AAII investor sentiment survey, conducted on Jan. 3., indicates that 59.8% of polled investors are bullish on the market, meaning they expect prices will be higher in six months. That's the highest level in about seven years, since a reading of 63.3% on Dec. 23, 2010, and it is significantly above the 38.5% historical average. The number of bullish investors has gone up by 7.1 percentage points in the past week alone.
5.00pm GMT
OK, time for a recap.
The global stock market rally has driven Britain and America's stock markets to fresh highs today, despite an underwhelming employment report from the US.
The headline numbers suggest that the jobs market remains strong. The labor department announced that the unemployment rate held steady at 4.1% in December, close to a 17-year low.
The US economy has now added more than 2m jobs a year for seven straight years, a run last seen in the 1990s. But the pace of hiring has slowed, the recovery remains uneven, and wages continue to lag behind growth.
Related: US job growth slows as economy adds modest 148,000 December jobs
4.48pm GMT
Boom! The FTSE 100 has ended the week at a new all-time high.
The blue-chip index of the biggest companies listed in London has closed at 7724 - the first time it has finished over the 7700 mark.
4.09pm GMT
I missed this detail earlier, but the opening bell of the New York stock exchange was rung by a professional bull rider - J.B. Mauney.
This honour was to mark the 25 anniversary of Professional Bull Riders (an enterprise devoted to the noble art of not falling off a 2000 pound bull with a temper).
4.01pm GMT
With 30 minutes to go, London's stock market could end the week at a new record high.
The FTSE has dropped back from this morning's intraday peaks, but is still 11 points higher than yesterday's record close, at 7707 points.
3.54pm GMT
Here's a nice summary of the US jobs report:
U.S. hiring slows at end of 2017 as job gains slacken to 148,000 in December https://t.co/itK8l6bltM pic.twitter.com/WCmzHI6ukG
3.45pm GMT
Just in: German lender Deutsche Bank says Donald Trump's tax reform package will cost it a1.5bn.
This makes Deutsche Bank the latest in a string of major companies to announce that their deferred tax assets are less valuable, now that America's corporation tax rate is being cut from 35% to 21%.
Deutsche Bank shares at session low after company says it "expects to recognize an approximate a1.5B non-cash tax charge" in its Q4 results due to U.S. tax reform. https://t.co/QPrwouAAgT pic.twitter.com/3WvxBHkoaw
3.17pm GMT
MSNBC's Steve Benen have calculated that US job creation slowed last year - the first 12 months of Donald Trump's presidency.
Benen writes:
Now that we have data for all of the previous calendar year, we can note that the U.S. added 1.84 million jobs in 2011, 2.19 million jobs in 2012, 2.33 million in 2013, 3.11 million in 2014, 2.74 million in 2015, 2.24 million in 2016, and 2.05 million in 2017.
Or put another way, while Donald Trump's first year as president has been pretty good overall for job creation, Americans nevertheless saw the slowest job growth in six years.
Job growth wasn't bad in Trump's 1st year in office, but it did slow to a six-year low. Job totals by year:
2011: 1.84m
2012: 2.19m
2013: 2.33m
2014: 3.11m
2015: 2.74m
2016: 2.24m
2017: 2.05mhttps://t.co/E8dQJwfiRi
3.09pm GMT
Newsflash: US factory orders rose by 1.3% in November, beating the consensus forecast of 1.1% growth.
That's up from 0.4% in October, and the fourth monthly rise in a row. American factories reported rising demand for transportation and electrical equipment.
*U.S. ISM NON-MANUFACTURING INDEX DROPS TO A FOUR-MONTH LOW
2.38pm GMT
Boom! The US stock market has hit fresh record highs (yet again) at the start of trading in New York.
Traders are shrugging off the news that America's job creation slowed last month.
"Surprisingly, Wall Street shook off the lower than expected jobs data and rose still higher, although the Dollar fell 0.3% versus the Euro and 0.26% versus the Pound on the news.
"December's Non-Farm Payrolls data does not fit the current narrative of booming US growth. The initial reaction from the market is to ignore. That could be perilous.
2.29pm GMT
The good news is that America's economy has now created jobs for 87 months in a row - dating back to early in Barack Obama's first term as president.
That has helped to pull the jobless rate down to its lowest since the end of 2000, at just 4.1%.
"2017 has been an extraordinary year for the US labour market, with around 200K jobs added every month, leading the Unemployment Rate to its lowest point in 16 years. The fact that we now see a slowdown can be more of a sign of employers not being able to find qualified personnel, than it is an indicator of weakness in the US economy.
Despite the fact that the Hourly Earnings Growth remains soft, this can report can still be a nudge for the Federal Reserve in the direction of hiking the rates.
2.22pm GMT
The 148,000 increase in the US non-farm payroll last month was "slightly disappointing', says Paul Ashworth of Capital Economics.
He also singles out the drop in retail employment:
Looking at the December gain in detail, manufacturing had a strong month, adding 25,000 jobs. Given the strength of the global economy, the decline in the dollar and the recent strength evident in the surveys, we can expect further factory job gains in the next few months.
The obvious weakness was in retail, which shed 20,300 jobs. That could be just noise or a consequence of the shift from bricks and mortar stores to online. As a comparison, couriers & messengers added only 2,100 jobs, so in net terms the structural shift is hardly positive for employmen
2.09pm GMT
Kully Samra, UK Managing Director at Charles Schwab, says:
"The US economy ended on a mixed note in 2017.
However, despite disappointing job numbers, over the year average hourly earnings have risen by 2.5%. In addition, we have seen the economy grow quarter on quarter, manufacturing and services indices rise and other factors such as business confidence and housing are also picking up.
2.04pm GMT
Here's Ian Kernohan, economist at Royal London Asset Management, on today's Non-Farm Payroll:
"There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate. Wage growth ticked higher to 2.5%, still a very modest rate despite the sharp fall in unemployment over the past few years.
"The Federal Reserve puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP. Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March."
1.54pm GMT
Jobs site Indeed.com have made a handy charts showing where jobs were created, or destroyed, last month across the US economy:
Construction and information led job growth in December, with manufacturing picking up steam. Retail lost jobs -- again. pic.twitter.com/VcicEJOYZb
1.53pm GMT
Ben Casselman of the New York Times is also worried by the fall in retail jobs
Weird few months for retail. But the big picture is clear: big job losses in a huge sector for (mostly low-wage) employment. pic.twitter.com/XQJNCwBrKE
1.48pm GMT
Seth Harris, who was deputy US labor secretary under president Obama, is concerned by the rise in under-employment (the U-6 rate).
He tweets:
#Jobs report toplines: 1. Fewer jobs in Dec. means little. 2. 2d month U-6 increased; growth in involuntary part-time concerning 3. #Wages=disappointing 2.5% nominal increase/year, meager 0.3% real increase 4. Middle-wage industries growing (mfring, constr'n); retail shrinking.
1.45pm GMT
Yikes! America's retail sector cut around 20,000 jobs last month, according to today's non-farm payroll.
That could be proof that the rise of internet shopping is forcing Main Street stores to cut back.
The Amazon effect? Retail jobs down 20K in December and 67K for the full year.
The retail apocalypse carries on. It dropped 20k jobs in December, adding up to 67,000 total jobs lost in 2017. It added 203k jobs in 2016.
1.39pm GMT
Worryingly, the US under-employment rate rose to 8.1% in December, from 8.0% in October.
That means more Americans wanted to work more hours than they were able.
1.37pm GMT
In better news, November's non-farm payroll has been revised up to show 252,000 new jobs were created (up from 228,000).
But what the revisions give with one hand, they take with the other. October's NFP has been revised down to 211,000, from 244,000.
1.34pm GMT
Instant reaction - this isn't a great jobs report. It's not a disaster either.
Mediocre numbers.
Jobs comes in at just 148K.
Wages come in in line, but last month revised a tick lower.
Unemployment steady but underemployment ticks higher. https://t.co/lr58ZiB7v6
Ouch
1.33pm GMT
On wages..... earnings rose by 2.5% per year in December, as expected.
But November's wage data has been revised down, to 2.4% (from 2.5%).
1.30pm GMT
Breaking! The US economy created 148,000 new jobs in December.
That's rather less than the 190,000 which economists had predicted.
1.27pm GMT
No argument....
This is definitely going to be the most exciting 2017 NFP report of 2018.
1.25pm GMT
Just five minutes to go, and the excitement is building....
1.18pm GMT
The US jobs report is notoriously hard to predict, and invariably revised sometime in the future.
But the Non-Farm Payroll is still one of the most eagerly awaited pieces of economic data in the calendar, as it gives an insight into how the world's largest labo(u)r market is performing.
Today is the day- the most important economic data, the US Non-Farm Payroll number, on the face of the earth will reveal its colour.
This number sets the trading tone and the trend for the rest of the month for traders. Today's number would provide us significant clues if the moderate growth in the US economy has left any impact on the jobs market, most importantly on the wage growth. Since the financial recession, the jobs market has been strengthening and this momentum was set by former President Barak Obama and Mr Trump is reaping the rewards.
1.02pm GMT
World stock markets are at record levels today, partly thanks to Britain's FTSE 100 hitting new heights this morning.
Another day, another record high for world stocks, as a growing sense of optimism over the global economy boosts risk sentiment.
Asian shares ventured higher during early trading on Friday, while European markets opened on a positive note amid the risk-on environment. With the Dow Jones Industrial Average surpassing 25,000 for the first time ever on Thursday, U.S equity bulls are clearly back in town and as such, we could see further gains on Wall Street this afternoon.
12.55pm GMT
Investors on both side of the Atlantic are bracing for the latest US jobs report to hit the wires, in 35 minutes time.
December's Non-Farm Payroll is expected to show that America's economy created around 190,000 new jobs last month, leaving the unemployment rate at just 4.1%.
US NFP (Dec) 1330GMT
UBS 205k
Credit Suisse 200k
RBC 200k
Scotia 200k
SocGen 200k
HSBC 195k
Exp. 190k
Commerzbank 190k
Lloyds 190k
MS 190k
Nomura 190k
BofA 185k
DB 185k
Citi 180k
Well Fargo 180k
BNP 175k
GS 175k
JPM 175k
ING 170k
We've been promised higher inflation and wage growth for some time and investors are increasingly not buying it.
Even some policy makers are starting to question why nothing has not materialised and should that continue, rate hike forecasts will start to slip, especially with interest rates now already elevated. Today's jobs report should offer some insight on this, with average earnings having arguably become the most important component of it. Still earnings are only expected to have risen by 2.5% compared to a year ago, below last year's peak and well below where they need to be for inflation to sustainably return to target.
#NFPGuesses Beats consensus, Dow pops, Trump tweets
12.32pm GMT
The Labour Party is also voicing concerns about the drop in UK car sales last year.
"The Government's mismanagement of the economy and mishandling of the Brexit negotiations has shaken consumer and business confidence and it's concerning that the sales of new cars are falling.
"The industry has been warning the Government time and time again and, as has become typical with the Tories, they have failed to listen or take action.
12.27pm GMT
Here's our financial editor, Nils Pratley, on the idea that markets are in a melt-up phase:
Related: 'Melt-up' coinage could signal last hurrah for US stock market
12.22pm GMT
Over in the City, the FTSE 100 index has climbed to new heights.
It just hit 7727 points for the first time, up 0.4% or 31 points today, as the global stock market rally continues to bubble away.
Since coming back from New Year, the phrase I've heard most is 'melt up'.
There's been a strong start to the year, and there are good reasons for that - the data is staying barn-stormingly strong.
I was a guest host on @bsurveillance earlier with @flacqua and @tomkeene talking about bullish markets, the global economy and political risks, especially US trade policy https://t.co/vRXKBPbu7m
11.52am GMT
The US president is up early, and wasted no time in tweeting about the bull market:
Dow goes from 18,589 on November 9, 2016, to 25,075 today, for a new all-time Record. Jumped 1000 points in last 5 weeks, Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs, Jobs, Jobs. Six trillion dollars in value created!
CNBC banging on about the fastest ever 1,000 point Dow rise in history. Obviously, by definition also the smallest percentage 1,000 point rise in history at only 4.17%. #marketsasshowbiz #lowquality
11.32am GMT
While diesel sales slumped by 17% last year, sales of alternatively-fuelled vehicles jumped by almost 35% as more people bought electric cars.
"Sales of diesel cars are falling but sales of EVs and hybrids are growing at double-digit rates. Consumers are sending a clear message to the car industry that it's time to move on from polluting diesel and the industry should listen to it.
Diesel cars have been fuelling a major air pollution crisis that has made our cities' air toxic and harmful to breathe. EVs and hybrids are better for both air quality and the climate. If the UK car industry fails to invest in the technologies that consumers want then they'll be left behind in the race for this trillion-dollar market."
11.17am GMT
Back to cars, and Ana Nicholls of the Economist Intelligence Unit, has identified several reasons for the drop in sales last year:
11.02am GMT
The latest inflation figures from the eurozone are out -- and they show that prices are rising more slowly than expected.
Despite the European Central Bank's huge money-printing operation, eurozone inflation probably only rose by 1.4% per year in December, down from 1.5% in November.
Eurozone Inflation slows to 1.4% DEC y/y vs. 1.5% in NOV - Draghi has no reason to go hawkish
10.53am GMT
Guardian Business has launched a daily email.
Besides the key news headlines that you'd expect, there's an at-a-glance agenda of the day's main events, insightful opinion pieces and a quality feature to sink your teeth into each day.
Related: Business Today: sign up for a morning shot of financial news
10.37am GMT
Breaking away from the car sales figures.... we have good news for the UK economy.
UK productivity (basically how much each worker actually produces) jumped by 0.9% in the third quarter of last year, new figures show.
UK labour productivity, as measured by output per hour, is estimated to have grown by 0.9% from Q2 2017 to Q3"but" pic.twitter.com/ONhWbEEKNP
Biggest rise in productivity Q3 for 6 yrs: encouraging but level wld have been 20% higher if pre-downturn trend continued. Stark blow to prosperity, long way to go
10.22am GMT
Unions fear that British car workers could be laid off this year, if sales don't recover.
Tony Burke, assistant general secretary of Unite, says the UK's "world class car workers" will be looking to the year ahead with trepidation", adding:
"The government has caused confusion and damage with its policy on diesel cars and needs to start listening to the industry and workforce. Diesel engines produced by Unite members in the UK are the cleanest in the world.
"Ministers' botched and badly thought through announcements are causing major damage to the industry. Combined with economic and Brexit uncertainty this risks taking the sheen off the jewel in the UK's manufacturing crown and the 800,000 high skilled jobs it sustains.
10.08am GMT
2018 could be another bad year for the motor industry, if consumer confidence remains subdued.
Richard Jones, managing director of motor finance group Black Horse, says the next few months will be crucial
"I believe we'll see new car sales continue to decline in the first quarter of 2018 given that this period in 2017 was so strong. This should help dampen fears of oversupply having a negative impact on used car prices and is positive in the long term by ensuring the new car market is operating from a sustainable position. I would also expect the used car market to continue to perform well.
"With uncertainties facing the UK economy it's hard to make a confident forecast for 2018 as a whole. I believe a big test for the industry will come after quarter one when we will see how the underlying UK economy and consumer confidence is influencing car demand."
9.50am GMT
Brexit is the biggest threat to the UK automobile industry this year, according to a new survey of car dealers from Close Brothers Motor Finance.
9.43am GMT
Worryingly, the drop in diesel car sales seems to have pushed emissions of carbon dioxide up.
Carbon tailpipe emissions have risen for the first time since 1997, with new cars averaging 121.04g/km, up 0.8% on 2016. Last year, UK new car CO2 emissions fell for the 19th consecutive year and this is the first year the figure has risen since records began.
9.29am GMT
The SMMT have just issued a press release, confirming that UK car sales declined in 2017.
Here are the key points:
9.18am GMT
In contrast to the UK, car sales in Germany actually rose last year.
Auto sales in Europe's largest economy increased by 2.7% during 2017. However - as in Britain - diesel sales tumbled (by 13%).
Pressure is growing on Germany to tackle diesel pollution as dozens of cities including Munich and Stuttgart, where BMW and Daimler are based, could face penalties for allowing nitrogen dioxide (NO2) levels in excess of European Union limits introduced in 2010, the DUH environmental lobby has said.
8.55am GMT
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8.46am GMT
Newsflash: Britain's FTSE 100 has hit a fresh intraday record high.
The index of blue-chip companies gained another 12 points, or 0.15% points, to 7708 points, six points above yesterday's record levels.
European markets continue to make further gains, with the sheer scale of the global rally demonstrating how investors are embracing all things equity and risk related, basking in the euphoria of synchronous global growth. Equity markets, which were already strengthening well in advance of Trump's $1.5tn tax cut, or indeed a prospective US infrastructure bill that could form the centrepiece of 2018 legislation, show no sign of any stress, with new record highs an almost daily occurrence.
With the party in full swing and implied volatility at such low levels, markets are seemingly immune to any possible downside, but the key risk that might ultimately bring markets down is inflation. A material increase in inflationary pressures would potentially force central banks to tighten rates faster than the market is expecting
8.33am GMT
Chris Bosworth, Director of Strategy at Close Brothers Motor Finance, believes Brexit anxiety and opposition to diesel cars are the main reason car sales fell last year.
"Today's figures reflect the impact that anti-diesel messages from the government and ongoing Brexit trade negotiations are having on both business and consumer confidence across the motor industry.
December marks the ninth month of consecutive decrease in new car sales as squeezed consumers are reluctant to purchase big ticket items such as cars and motorcycles.
"Quite frankly, 2017 has been a year to forget for the UK car industry.
"You'd have to dig pretty deep to find anything positive to take from the past 12 months which has seen diesel demonised in the media on a weekly basis.
8.17am GMT
Bloomberg blames "Brexit's impact on buyer confidence and lingering skepticism over the emissions performance of diesel cars" for the 5.6% drop in UK car sales last year.
UK car sales suffered their biggest annual slide since the global recession, stunted by #Brexit's impact on buyer confidence and lingering skepticism over the emissions performance of diesel cars https://t.co/k9MRnr09rA via @_benkatz #tictocnews pic.twitter.com/KBwoINpDZg
8.14am GMT
The Financial Times agrees that Britain's car industry needs clarity about the UK's future relationship with the EU, fast:
You can't wait until March 2019," [SMMT chief Mike Hawes] said, when the UK will leave the EU.
"Production is a tap that takes a long time to turn on and off."
7.58am GMT
It's official: Britain's car industry has suffered its biggest drop in sales since the financial crisis.
Sales of new vehicles fell by 5.6% during 2017 - the first annual decline since 2011, and the worst since 2009.
UK car sales declined in 2017 after five years of rapid growth, with the industry blaming government for a collapse in consumer confidence in diesel vehicles.
Total sales for last year were 2.54m new vehicles, a decline of 5.6% on 2016, with diesel sales dropping 17%. Despite the decline, 2017 sales remained near the highest on record.
Related: First fall in car sales in five years blamed on fears over diesel ban
"Some investment decisions are overdue " we need clarity [on the terms of a transitional period] by the end of the first quarter."
[Otherwise] They will have to start implementing contingency plans."
7.45am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
On a month-on-month basis average earnings are tipped to increase by 0.3% and on an annual basis they are forecasted to rise by 2.5%.
The US has been steadily creating new jobs over the past few years, but wage growth has been sluggish. If the US economy wants to step up a gear in terms of economic growth, wage growth and in turn the spending levels will need to tick up.
European opening calls update courtesy of CMC MARKETS at 6.37am -FTSE 100 is expected to open 4 points lower at 7691. DAX is expected to open 23 points higher at 13190. CAC 40 is expected to open 2 points higher at 5415.
Friday's Daily Mail City: Wall St rally lifts global markets to record highs #tomorrowspaperstoday pic.twitter.com/KHomaerwk1
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