Markets slide on uncertainty over US rates after latest jobs figures -as it happened
America's jobless rate has fallen to 4.9% after US companies took on 151,000 new hires in January, fewer than expected
- Non-farm payroll rises by just 151k..
- ....but average hourly earnings jump
- Analysts: It's a mixed report
- Full story
5.56pm GMT
Citigroup is the latest big bank to say that Britain's economic growth and the pound would be hit if it leaves the European Union.
Citi said Brexit could knock up to 4 percentage points off economic growth over the next four years, and the pound could fall by 15% to 20%. The bank's Michael Saunders said, "Brexit would probably trigger major economic weakness and a political crisis in the UK...with a 15-20 per cent depreciation of sterling in trade weighted terms, resultant return to import driven inflation and a major policy dilemma."
5.33pm GMT
Over in Greece, thousands of police men (backed up by firemen and coastguard officials) are marching through Athens chanting "we save lives, don't drown ours " in reference to pension cuts, writes Helena Smith.
All are in uniform. They're protesting pension funds being amalgamated and demanding that they be excluded from planned reforms by virtue of the sensitivity of their jobs. Protestors have descended on the capital from all over Greece, including the southern Aegean, site of mass refugee arrivals. The union of police employees from Trikala are participating with a banner that reads: "No to the measures of death. Stop the cuts."
5.02pm GMT
The initial reaction to the US jobs numbers, which showed a weaker than expected rise of 151,000 in non-farm payrolls, was that a US rate rise was therefore off the table in the immediate future.
But as the afternoon wore on, investors began to concentrate on the rise in average earnings and the fact that the jobless rate was at an eight year low. So the prospect of a rate rise was suddenly back on the agenda, and as a consequence the dollar rose and markets fell.
4.15pm GMT
On the market's negative reaction to the mixed jobs data, David Morrison of Spreadco said investors needed guidance from the US Federal Reserve:
[It was] a bad number on the face of it suggesting that the Fed is less likely to be in any rush to raise rates further at its March meeting, or even for the rest of 2016. If that's the case then one would've expected the dollar to fall, precious metals to build on recent gains and equities to rally.
But two hours after the event and with all the US markets fully open that wasn't what we were seeing. The dollar was up; gold and silver were slipping and what began as a modest pull-back on the major US stock indices was beginning to gather downside momentum. What's going on?
4.01pm GMT
Markets are extending their losses as investors look to the rise in US average earnings and conclude that perhaps there will be more rate rises from the Federal Reserve this year after all.
The Dow Jones Industrial Average is now down 150 points or 0.9%, while in Europe the FTSE 100 has fallen 20 points and Germany's Dax is down 34 points.
3.49pm GMT
Something a bit lighter on non-farms day:
Twitter thought this @FerroTV #jobs tweet was in French. pic.twitter.com/p2icWi3i5N
3.13pm GMT
Back with the US jobs data, and the weaker than expected headline figure adds to the feeling the Federal Reserve erred in raising interest rates in December, says Larry Elliott:
Hindsight is a wonderful thing. It's easy to be wise after the event and say a decision was a mistake. But it's hard to imagine that the Federal Reserve would have raised interest rates in December had it known then what it knows now.
News that employment growth as measured by the increase in non-farm payrolls was up by 151,000 is just the latest piece of evidence to suggest that the US economy is going through a tough period. Growth in the fourth quarter was weak, sales of durable goods suggest that businesses are reluctant to invest, and consumers are saving rather than spending the windfall from lower oil prices.
Related: Weak US employment growth further suggests Fed rate rise was a mistake
3.08pm GMT
Really the worst of both worlds for PT government. Long list of austerity measures and still gets budget smashed by Commission
2.59pm GMT
The European Commission has said that it accepts the Portuguese budget after some changes, but it is still at risk of non-compliance with EU rules. It will assess the budget again in the spring. It said:
The European Commission considers that the Portuguese government's 2016 Draft Budgetary Plan is at risk of non-compliance with the provisions of the Stability and Growth Pact. In its Opinion adopted today, the Commission therefore invites the authorities to take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the Stability and Growth Pact.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: "...The Portuguese Government is invited to take the necessary steps to ensure that the 2016 budget is compliant. In spring, the Commission will reassess Portugal's compliance with its obligations under the Stability and Growth Pact, including under the Excessive Deficit Procedure."
2.57pm GMT
We mentioned earlier that the European Commission was meeting to discuss Portugal's anti-austerity budget, and could reject it. Well, perhaps not entirely.
#Portugal #OE2016 revised draft budget to be graded as 'partially compliant' by @EU_Commission. /via @diarioeconomico
2.48pm GMT
The non-farm figures, although the headline number was lower than expected, still suggest further US rate rises this year, according to UniCredit chief economist Harm Bandholz:
The [jobs] report unequivocally supports the Federal Reserve's (and our) baseline view that further gradual rate hikes are warranted. After all, ongoing labor market dynamics are the main driver of consumer spending, which in turn is the main driver of economic growth in the US.
A falling unemployment rate and faster wage gains also mean that the Fed is getting closer to meet both of its mandates. That said, many Fed officials have in recent weeks highlighted the unusual uncertainty about the outlook, and stressed that they need to see evidence that global headwinds and tighter financial conditions do not affect the US economy. So while this report is undoubtedly a step in the right direction, the FOMC wants to see more of these signs before pulling the trigger again.
March rate hike odds:
- Before: 10%
- After: 12%
But now at least one rate hike in 2016 pic.twitter.com/p54XoTQDyP
2.42pm GMT
Following the mixed US employment figures, the US market is slipping back in early trading.
The Dow Jones Industrial Average is down around 30 points or 0.16% while the S&P slipped 0.2% and the Nasdaq fell 0.4% at the open.
2.32pm GMT
So, fewer US rate cuts this year than previously forecast perhaps.
Barclays on payrolls: "we now expect two rate hikes this year in June and December, as opposed to three in our previous baseline."
2.27pm GMT
More reaction to the non-farm numbers. And here's a gloomy one from Gary Chaison, Professor of Industrial Relations at Clark University:
There is no joy in this month's jobs report and no sign that things have turned around. The recovery isn't happening, it isn't expanding and the labor participation rate is holding. While wages are up a bit, it isn't enough to make an impact. A lot of workers have substituted good jobs for poor jobs or aren't working at all which is why the labor participating rate continues to hold. I think the real problem is a lack of consumer confidence that we're going to come out of this, the economy can recover or we can fall back into a recession. For the huge recession we had, we should be seeing a huge recovery and this is impacting the voters and public in general.
2.23pm GMT
Chris Williamson, chief economist at Markit, said:
Signs of a slowdown in hiring, still-weak annual pay growth and disappointing survey data, all pitched alongside an adverse financial market environment so far this year, reduce the odds of the Fed hiking rates again in March.
"The unemployment rate fell to an eight-year low of 4.9% as the economy added 151,000 jobs in January, according to official estimates, signalling a marked slowing in the rate of job creation after the surge seen late last year. However, this is still a robust rate of employment growth, and a trend strong enough to keep bringing unemployment down. Furthermore, December's numbers had in part reflected stronger than usual construction sector hiring due to unseasonably warm weather...
2.11pm GMT
Some commentators have concluded January's Non-Farm Payroll was good, apart from the bad bits. Others reckon it was a bad report, apart from the good bits.
So on balance, it's probably OK.
DB Ruskin: "marginal disappointments on the headline payroll, but stronger than expected breakdown in almost all the main details"
Headline aside, this was a *good* US jobs report.
NFP jobs misses at 151k
Bad news could be bullish for stocks ... if peeps think it delays further hikes
Wage gains in NFP are good, so its not really bad data
Interestingly, for all the sturm und drang about industrial sector weakness, manufacturing employment was a nice +29k in January.
2.02pm GMT
There are around 6 million Americans stuck in part-time jobs who want to work full time, down from around 6.8 million a year ago.
Today's report says:
These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs.
Your monthly reminder: Virtually all the employment gains in the recovery have been full-time. pic.twitter.com/0VSSbrtQMH
1.51pm GMT
Mixed but not too bad, is the verdict of Rob Carnell at ING on the non-farm numbers, with a March rise in US interest rates now very unlikely:
The January labour market survey was very mixed, though the headline payrolls figure was on the soft side, at only 151,000, with downward revisions to the previous months data (262,000 down from 292,000).
But aside from this, the report wasn't all that bad. The household survey registered an eye-popping and rather improbable 615,000 increase, which added to the 485,000 gain in December suggests more than 1.1 million jobs were created in the last two months. That takes some swallowing, but helped to push the unemployment rate down a further notch to 4.9%.
1.49pm GMT
Several industries took on more staff last month, says the Bureau of Labour Statistics.
Here's a breakdown of where new jobs were created in January:
1.48pm GMT
US futures - which before the non-farm figures were predicting a 19 point gain on the Dow Jones Industrial Average - are now suggesting a 65 point decline when the market opens.
1.47pm GMT
These latest non-farm payroll numbers are another set of poor data since the US Federal Reserve raised interest rates in December, says Dennis de Jong, managing director at UFX.com:
However confident Janet Yellen and her Fed colleagues were when raising interest rates in December, the US data released in January must be giving them food for thought - and today's poor non-farm payroll figures are no different.
Adding less than 200 thousand jobs for the first time since October, coupled with lower than expected GDP and productivity figures, has taken some of the shine off of the previously buoyant US economy.
1.43pm GMT
Josh Raymond, director at London-based broker XTB, sums it up: It's a mixed bag.
Completely mixed bag for US jobs. Payrolls weaker and Dec jobs revised lower but jobless rate falls and average earnings higher. #USD rises
1.42pm GMT
#NFP caused #stocks to show a negative initial reaction, while #USD was mixed - initially down, then up and now back to where it was #FX ^FR
1.40pm GMT
The dollar is fluctuating wildly as traders (and their algorithms) try to decide if this is a good jobs report, or a bad one.
EURUSD's reaction to #NFP: "Uuugly, I'm outta here -- oh wait, look at these earnings, oh and participation!" pic.twitter.com/c9R1wMja4k
1.38pm GMT
Here's the unemployment rate:
1.36pm GMT
This is important. Average earnings rose by 0.5% month-on-month in January, and were up 2.5% over the last year.
That's a decent pick-up, suggesting that workers are feeling the benefits of the recovery. And that will reassure the Federal Reserve that it didn't blunder by raising interest rates in December.
Earnings>payrolls
1.36pm GMT
1.34pm GMT
December's payroll has been revised down to +262,000, down from the previous estimate of +292,000
But it's not all bad - November's has been revised up to +280,000, from +252,000.
1.31pm GMT
Here we go!
The US economy created 151,000 new jobs last month, according to the Non-Farm Payroll which is flashing on the wires right now.
1.26pm GMT
Economist Frederik Ducrozet predicts solid earnings growth....
Decent wage growth #NFPGuesses
1.17pm GMT
If the economists are right, today's non-farm payroll will show the slowest job creation since September:
**NFP due in 18 minutes**
Chart with previous and January est. pic.twitter.com/lPRAsUZSUG
12.57pm GMT
Thank goodness. We're about to get the final major economic news of the week.
At 1.30pm GMT sharp, or 8.30am Washington time, we'll get a insight into the state of the US jobs market. Even though Non-Farm Payroll is notoriously unpredictable, and regularly revised, it will still set the mood in the markets - possibly for some time.
US #NFP Guesses
SocGen 245k
BarCap/Citi 225k
HSBC 214k
JP AM 209k
Exp/CS/UBS 190k
MS 180k
Wells 178k
DB/JP Chase 175k
GS/BofAML 170k
12.35pm GMT
It will take something remarkable today to prevent the US dollar posting its worst week since the last global downturn.
Since Monday morning, the dollar has lost almost 3% against a basket of major currencies, as traders reassess the prospects for American monetary policy following signs of economic weakness at home and abroad.
The #dollar's horrible week (only rising against #Mexico peso) pic.twitter.com/0HV6VKKokN
11.27am GMT
Yesterday, Greece's riot police clashed with protesters as Athens was gripped by a huge anti-austerity protest.
Today, officers have been protesting outside prime minister Alexis Tsipras's mansion, objecting to cuts to their own pensions.
The brief rally dispersed without any upheaval but police are expected to monitor a larger anti-austerity rally scheduled to take place in central Athens on Friday afternoon when fire service workers are to join police officers in protesting the planned changes to the pension system.
Police protest outside Greek premier's residence ahead of larger rally https://t.co/p84zOhpLTB pic.twitter.com/fj9l22Xqyo
11.12am GMT
For the second day running, mining stocks are going on a remarkable rally.
Anglo American is leading the charge, up 10%, adding to Thursday's 19% surge, with commodity player Glencore up over 5%.
I'm starting to think there's move to this move in Anglo American than just a bear squeeze. pic.twitter.com/8DfHywMmeU
10.54am GMT
ArcelorMittal has become the latest company to count the cost of the commosity crunch
The world's largest steelmaker is to raise $3bn through a rights issue to strengthen its finances, news that sent its shares sliding by over 7%.
Related: Commodities crisis pushes ArcelorMittal into $8bn annual loss
10.10am GMT
After weeks of rocky markets, traders are grateful that there's really not much going on today.
That will change when the US jobs report lands at 1.30pm.
"Equity markets are pretty much flat amid a welcome calming of recent volatility as investors adopt their traditional wait-and-see ahead of the US monthly jobs report, even if it should have little bearing on the topic and driver of the week - the Fed's ability to raise rates in 2016 amid soggy data and protracted financial market gyrations following its December hike.
9.30am GMT
Two and a half months after taking office, Portugal's left-wing government is heading into a showdown with EU authorities.
Portugal yesterday adopted its budget without waiting for Commission approval. Now, if the budget is rejected in Brussels "it would mark the first time a eurozone government has had its spending plan vetoed."
Some suspect that a small country (Portugal) is once again being targeted not only on the merits of its own problems but to make a point to a bigger country (Italy) with similar issues that the EU dare not touch directly.
8.42am GMT
Yougov's claim that the Brexit campaign have a nine-point lead has been gently rubbished by Andrew Cooper of rival polling group Populus:
Apparently a moment to remember Twyman's Law: a poll or statistic that is unusual or interesting is almost invariably wrong.
8.39am GMT
European stock markets have opened cautiously, with little news to stir investors ahead of the US jobs report in just five hours time.
The German and French markets have picked up, led by exporters, following a small dip in the value of the euro against the US dollar this morning.
Looking ahead, it's the US non-farm payrolls that will dominate in the short term as this could readily counter the dollar weakness that we've seen creeping in of late.
Critically this has been pushing commodity prices higher and accounted for at least part of the short squeeze that was seen as buoying the miners yesterday, so anything that looks too hot in the data could have repercussions going into the weekend break.
8.21am GMT
UBS analyst Paul Donovan isn't impressed by the media clamour over Non-Farm Payroll Day.
Peppering his morning research note with sarcastic exclamation marks, he writes:
Employment report Friday!!! A frequently revised statistic about a tiny change in a very large labour market!!! Cue the media frenzy right now. The consensus is for a generally OK report in aggregate.
8.16am GMT
There's a lot of chatter about Brexit in the City this morning.
Bank of England deputy governor, Ben Broadbent, has told the BBC that companies don't appear to be freezing spending ahead of the EU referendum (which could come in June)
"We have not yet seen, regarding investment intentions, any weakening of those of late,but obviously it's something we watch pretty closely."
#Brexit campaign has its biggest lead (9pts) after voters reject Cameron deal on EU reforms. @YouGov for @thetimes pic.twitter.com/EenrkKvNjj
Reminder: Times poll is bollocks online poll, betting is strongly 'remain'. #whatmeworry pic.twitter.com/CQkCnVcjyW
7.57am GMT
Most Asian stock markets fell today, as traders hunkered down ahead of this afternoon's non-farm payroll report.
In Japan, the Nikkei fell by another 1.3%, amid nervousness that the yen might continue to strengthen against the US dollar (bad for Japanese exporters and inflation).
7.44am GMT
The European trading day has started with weak economic data out of Germany.
German factory orders declined by 0.7% month-on-month in December, according to stats body Destatis. Economists expected a 0.5% drop, following a 1.5% jump in orders in November.
Domestic orders fell 2.5%, the ministry said, while euro-area orders slumped 6.9% and demand from outside the currency bloc rose 5.5 percent. Orders for investment goods declined 0.5, and for consumer goods surged 4.3 percent.
"Order activity somewhat recovered in the fourth quarter," the ministry said in a statement. "Increasing demand from countries outside the euro area indicates a gradual recovery the global economy. However, industry expectations have somewhat clouded, signaling a more modest recovery in industrial activity.
Germany's factory orders fall by more than expected as export slowdown hits confidence https://t.co/rpjQswbSTX pic.twitter.com/83DKGRpVKo
7.24am GMT
Good morning.
Another turbulent week in the markets is nearly over. But there's just one major hurdle to get over first - the US unemployment report, due at 1.30pm GMT.
A big miss on the NFP numbers (150,000 or less) would see a further dive in the US dollar, killing expectations of any further rate hikes by the Fed.
Our European opening calls:$FTSE 5896 down 3
$DAX 9367 down 26
$CAC 4225 down 4$IBEX 8461 down 7$MIB 17599 down 27
Most European markets called to open broadly flat or minor negative. US Payrolls up at 1.30pm. The calm before the storm? #stocks
Ben Broadbent tells BBC radio UK economy doing well, nothing wrong with BoE's guidance, no sign EU referendum hitting business investement
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