US job creation beats forecasts, as trade war with China begins - as it happened

Graeme Wearden

from on 2018-07-06 15:57 (#3TCK7)

All the day's economic and financial news, as Washington and Beijing impose 25% tariffs on billions of dollars of each other's exports

Summary: Trade war breaks out
213,000 jobs created in America last month
Job creation strong, but wage growth weak

Earlier:

4.54pm BST

And finally, here's our Q&A on the new US-China tariffs, and what it might mean for the global economy.

4.28pm BST

In other trade spat news, Russia has announced new tariffs on US imports - in retaliation to the US steel and aluminium levies which Donald Trump signed off early this year.

This will push the cost of certain US imports up by between 25% and 40%.

In particular, some types of road construction equipment, oil and gas equipment, tools for metal processing and rock drilling, as well as fibre optics are covered."

4.10pm BST

CNBC have created a very handy list of the Chinese imports subject to America's new 25% tariffs:

3.56pm BST

Will Hobbs, head of investment strategy at Barclays Smart Investor, believes president Trump is trying to squeeze concessions out of China, rather than deliberately cause economic harm.

With US elections this autumn, the White House doesn't want to upset voters, Hobbs argues:

"The drumbeat of a full blown trade war is certainly getting louder, but we still maintain that this is more likely a negotiating strategy on the part of the US administration designed to prise open further a Chinese economy which remains amongst the most protectionist in the world.

We are reliant on the presence of US midterm elections in November, as well as a degree of economic self-interest, to act as a restraining force on the US administration. The fact that most of the targeted goods in this latest batch of tariffs go into the supply chains of US multinational manufacturers and originates from companies that aren't in fact Chinese gives some sense of how complicated, and messy, it is to prosecute a trade war in the modern era of exploded corporate supply chains.

3.22pm BST

On the US jobs report, Capital Economics says:

The 213,000 gain in non-farm payrolls in June, which followed an even stronger 244,000 rise in May, provides further evidence that uncertainty over trade policy isn't yet having a major impact on the economy.

It also leaves the Fed firmly on track to raise interest rates twice more by year-end.

3.09pm BST

The Financial Times reports that Chinese social media was gripped by the process of Peak Pegasus, a ship full of American soyabeans, earlier today.

Peak Pegasus was in a race against time to reach the port of Dalian before Chinese tariffs took effect.

Heartbreaking news: The ship carrying soybeans that was racing to China in an attempt to beat the tariff implementation didn't make it on time. https://t.co/CQ5wGaXxuL pic.twitter.com/8EBksLsJQi

2.59pm BST

One of Donald Trump's economic advisors has predicted that Donald Trump will succeed in shaking up global trade.

The president wrote The Art of the Deal... I think we're going to see those deals soon.

2.24pm BST

Americans have been waking up to the news that they are officially in a trade war with China.

Ovenight, Washington imposed 25% tariffs on $34bn of Chinese imports - enacting a plan laid out by president Trump earlier this year. The levies mainly affect Chinese technology such as aerospace, IT, and medical kit.

Shots fired last night in the global trade war. Here are the U.S. products that China is targeting.https://t.co/YokW9RrKvn pic.twitter.com/qPOADCxCvS

Investors must therefore be prepared for volatility to intensify. This will particularly be the case if companies pass on any tariffs to consumers, which could stoke inflation.

"If we get a prolonged trade war and the US Federal Reserve continues to raise rates and tighten policy, there is a danger that this combination of headwinds could cause the global economy to slide towards recession."

2.02pm BST

Here are the key charts from today's US jobs report:

2.01pm BST

The US dollar has fallen against other major currencies, following today's jobs report - and the underwhelming wage growth.

That's pushing shares up in New York in pre-market trading.

US stock-index futures rise and the dollar falls as traders parse the latest jobs figures. https://t.co/ggPZHPozeO pic.twitter.com/XOj32fcRM3

1.53pm BST

Today's jobs report suggests America's economy is shrugging off the threat of a trade war.

Our US business editor Dominic Rushe explains:

The US added 213,000 jobs in June as the unemployment rate ticked up to 4%, suggesting the start of an international trade war has so far done little to dent the robust jobs market.

The US has now added jobs every month for 93 months in a row - the longest such stretch since records began. The unemployment rate most likely rose as more people who were not looking for work started job searches.

1.48pm BST

Here's a snap summary of the US jobs report, from Bloomberg TV

1.42pm BST

Despite the solid job creation in May and June, the US unemployment rate has risen to 4% from 3.8%.

It's the first rise in a year, and might fuel concerns that the jobs market is levelling out.

The unemployment rate rose for good reasons, not bad. Labor force participation up two ticks, labor force grew by 601k. pic.twitter.com/jqiVgmE1VO

1.36pm BST

Newsflash: America's labour market created more jobs than expected last month, but wage growth remains subdued.

The June non-farm payroll, just released, rose by 213,000 - beating forecasts of a 195,000 increase.

Stock futures tick a little higher.

Basically the report signals ongoing strong pace of job creation, but absolutely zero signs of overheating etc. pic.twitter.com/O4w33AsuIp

1.27pm BST

Here's a video clip of Airbus CEO Tom Enders warning today that Brexit will be damaging for his industry and the UK, whether it's "soft or hard, light or clean or whatever you call it".

Airbus CEO Enders: "Absolutely realistic" Brexit warning about thousands of parts not being certified.. no EASA & certifying UK parts in Airbus planes "falls apart" on Brexit, could mean production standstills..after 1 year "lost" in this process, have to prepare for worst case pic.twitter.com/UIPdo17kc9

1.13pm BST

China's premier has warned that Beijing will respond to Donald Trump's tariffs, even though a trade war isn't in anyone's interests.

"A trade war benefits no-one because it hurts free trade and the multilateral process.

"If a country wants to raise tariffs, China will respond to defend itself."

11.55am BST

Paul Donovan of UBS argues that the US and China aren't in a trade war yet....but they will be, if Trump actually slaps tariffs on $500bn of Chinese imports (as he seemed to threaten last night).

Donovan also points out that US consumers will pay these tariffs:

11.53am BST

Europe's trade commissioner, Cecilia Malmstrom, has tweeted that these new tariffs will hurt the global economy:

Worrying development with escalation of tariffs between US and China. Clearly damaging for the world economy. Trade wars are bad and not easy to win.

11.31am BST

US farmers are understandably concerned about the trade war, which could badly dent their exports.

China is the biggest single market for US soybeans, buying more than half the country's production. They've now less attractive due to the additional 25% tariff being levied by Chinese officials at the border, which might increase demand for Brazilian soy instead.

"If we're not spending money then other industries aren't making any money off of us, either."

10.35am BST

The financial markets continue to take the trade war in their stride. European equities are a little higher, after a positive day in Asia.

Donald Trump's claim overnight that he could eventually impose tariffs on $500bn of Chinese imports - a truly colossal sum - hasn't caused any obvious panic.

The dollar index was down 0.10% to 94.30, the single currency rose 0.20% to 1.1715, while the Swiss franc and Japanese yen were treading water.

The Chinese yuan was down only 0.10%. Equities were blinking green across the screen, while bond yields were relatively stable on both side of the Atlantic.

10.06am BST

Robin Bew of the Economist Intelligence Unit points out that tariffs actually hurt the country imposing them, as well as their target.

#US tariffs on #China come into force today, with Trump threatening to expand their scope to all US China trade if there's retaliation. Important to remember that tariffs ultimately paid by the importer, not the exporter. So US taxing itself. Ho hum....

10.06am BST

Newsflash: China has joined Donald Trump's trade war, by imposing retaliatory tariffs of 25% on $34bn of US goods.

The Xinhua news agency is reporting that China's tariffs came into effect at 12.01pm Beijing time - shortly after America fired the opening salvo.

The Latest: China says tariff hikes on U.S. goods took effect. https://t.co/obNmPXxlpr

9.49am BST

The latest reading for the productivity of British workers is out, and they're unlikely to cheer the chancellor, Philip Hammond, who has made boosting efficiency one of his top priorities.

According to the Office for National Statistics, economic output per hour of work dropped by 0.4% in the first three months of 2018 from the final quarter of last year, amid a strong increase for employment across the UK.

When more people contribute to the economy without generating increased levels of economic output, productivity falls.

9.33am BST

Newsflash: Airbus says is already taking steps to protect itself from Brexit damage:

Significant re Airbus' warning hard Brexit could force it out of UK. CEO Tom Enders says the company is already putting plans in place:

"Rest assured that we are taking first preparations as we speak in order to mitigate consequences from whatever Brexit scenario may follow."

Airbus CEO Tom Enders says hard Brexit is worst-case scenario but all Brexits are bad: "Brexit in whatever form, soft or hard, light or clean, whatever you call it, will be damaging for industry, for our industry and damaging for the UK, whatever the outcome will be."

9.21am BST

Airbus CEO Tom Enders insists he isn't trying to meddle in UK politics - despite launching such a stinging attack on the government.

More from Airbus CEO Tom Enders on Brexit: "We believe UK should at least stay in customs union, should stay in regulatory bodies such as EASA and ECJ. This is a minimum that would be required to minimise damage to business." (1/2)

Airbus CEO Tom Enders: "I'm not a politician. Our interference is not to play politics. We owe it to our stakeholders to be truthful about the consequences and those would be severe in the event of an unorderly or hard Brexit." (2/2)

8.56am BST

Airbus is 'going for broke' in its attempts to avoid a damaging hard Brexit, reckons Tom Macleod of Sky News.

After their warning last week, #Airbus CEO Tom Enders going for broke on #Brexit:

"UK government has no clue or at least consensus on how to execute Brexit without severe harm".

Here's why @BorisJohnson should give a f*** about business: 239 @Airbus A320s were made in last 6 months. All 478 wings were made in Wales

8.34am BST

Back in Britain, the boss of Airbus has launched an absolutely blistering attack on the UK government's Brexit strategy.

CEO Tom Enders has told reporters that Theresa May's administration has "no clue" about how to execute Britain's departure from the European Union without causing 'severe harm'.

Airbus CEO Tom Enders: "The sun is shining brightly on the UK, the English team is progressing towards the final, the RAF is preparing to celebrate its centenary and HMG still has no clue, no consensus on how to execute Brexit without severe harm."

Airbus CEO Tom Enders: "This is a very discomforting situation for us." Says some people have said business should not speak up but they owe it to their shareholders to do so.

"Let's see what comes out of Chequers, white smoke, black smoke or no smoke."

Airbus boss Tom Enders goes in studs up on the government over Brexit policy. If anyone was expecting Airbus to back off after warning it could leave the UK, think again. https://t.co/cwbm0LBeJd

Airbus CEO Tom Enders starts with swipe at Whitehall "Her Majesty's Govt still has no clue or consensus on #Brexit... a discomforting situation for us" #FIA18 pic.twitter.com/1SFcyt6tBO

8.26am BST

Anticipation is building in the markets, as traders wonder when China will deliver on its promised retaliation.

Mike van Dulken of Accendo Markets says Beijing is "teasing the markets" by delaying its response to America's move, making it clear that the US fired the first shots.

So we've had the imposition 'tit', but as yet no reciprocation 'tat'

8.24am BST

The American Chamber of Commerce in China has appealed to both sides to negotiate a settlement.

Chairman William Zarit warned:

"There are no winners in a trade war.

We urge the two governments to come back to the negotiation table."

8.09am BST

"Buy on the sound of cannons" is an old City maxim. And today, traders are buying on the sound of tariffs.

Asian stock markets have actually risen today, despite Donald Trump pulling the trigger on Chinese imports. China's Shanghai Composite index has gained 1%, with Hong Kong close behind.

The first batch of US tariffs on China came into force - it is a milestone in the trade war but a very well-telegraphed one. China said it's forced to retaliate, but did not specify a time-frame, helping risk appetite.

Trump repeated his claim that China is "killing us" on trade at a rally in Montana last night - but his pattern so far has been to respond to the response - so China's delay in retaliation may slow down the war.

7.53am BST

China's newspapers are very critical of Donald Trump for launching the trade war, accusing the US president of leading a 'gang of hoodlums'.

Our Beijing bureau chief, Lily Kuo, reports:

"If what the US wants is to escalate a trade war with China, then so be it. A little fighting may be the only way the Trump administration clears its mind and allows everyone to sober up," the state-run Global Times said on Friday.

"The Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China," said an English-language article in the China Daily. On Thursday, a spokesperson for China's ministry of commerce said the US will be "opening fire on the whole world and also opening fire on itself."

7.40am BST

China has swiftly hit back, accusing the United States of starting "the biggest trade war in economic history"

The country's Commerce Ministry said imposing tariffs on $34bn of Chinese sales into America would hurt the global economy, damage large companies and consumers.

"China is forced to strike back to safeguard core national interests and the interests of its people."

US has ignited largest trade war in economic history: China's MOC https://t.co/HEHBZdx1Uu pic.twitter.com/VPfxtg5L15

7.19am BST

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

The trade war between America and China has begun, as Donald Trump delivers on his threat to hit $34bn of Chinese imports with new 25% tariffs.

"34 [billion dollars], and then you have another 16 in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300."

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