US economy adds fewer jobs than expected amid trade tensions – as it happened

Rolling coverage of business, economics and markets as non-farm payrolls data show 130,000 new jobs

• Riskier assets gain after trade war and US data give positive signal
• German industrial production slump raises recession fears
  
• Sterling retreats from no-deal avoidance boost

2.23pm BST

Remember that Goldilocks report that we talked about earlier? The non-farm payrolls numbers appear to have delivered pretty much that. Not too hot, not too cold.

Donald Trump, the US president, had an early dig at Federal Reserve chair Jerome Powell, shortly before the jobs numbers came through, but moved on quickly to watching Fox News, if his Twitter feed is to be believed.

Aside from the headline payroll numbers, the rest of the employment report was actually quite positive.

That positive news means the Fed is still overwhelmingly likely to cut interest rates by no more than 25bp later this month.

1. The nightmare scenario for the Fed has always been a slowing economy and rising inflation.

2. Not quite there yet, but the outlook for job growth has materially weakened, just as tariffs start to push up goods (CPI core goods y/y at 6y high) and wage gains starting to motor; 3-month annualized at 4.2%, highest in 11 years.

3. None of this will stop the Fed easing this month, but if these trends continue they'll find it very hard to deliver all the endless easing markets want.

Hiring has clearly slowed in manufacturing -- 3k jobs added in August, and June/July revised down. But apart from a one-month blip, we have not seen outright job cuts as some predicted given the trade war. pic.twitter.com/DFvjiBXfSA

1.58pm BST

The jobs growth was the weakest in three months, despite a boost from the hiring of temporary workers for the 2020 Census, the Bureau of Labor Statistics said.

The 130,000 reading was below the average for the year so far, as the US economy comes to terms with slowing growth. Economists expect Donald Trump's trade war with China to weigh on growth further.

Monthly non-farm #payroll gains eased to 130K in August but 3-month moving average is near pace needed to absorb population growth. Hiring for 2020 Census was a factor but gains occurred in construction, health services, professional/business services, and leisure/hospitality. pic.twitter.com/32ZhTakFkG

1.46pm BST

Investors have tempered their slight mood of optimism from earlier.

Gold prices have recovered some of their losses after the weaker than expected print: spot prices are down by 0.2%.

1.41pm BST

Donald Trump, the US president, already has his thoughts on monetary policy - getting his jibes in early just ahead of the payrolls data.

I agree with @jimcramer, the Fed should lower rates. They were WAY too early to raise, and Way too late to cut - and big dose quantitative tightening didn't exactly help either. Where did I find this guy Jerome? Oh well, you can't win them all!

1.32pm BST

The US economy added 130,000 jobs, lower than the 158,000 predicted by economists.

1.25pm BST

The FTSE 100 is slightly down, by less than 0.1%, while sterling has slightly moderated some of its earlier losses: it's now down by 0.2% against the dollar and the euro.

The dollar index, which tracks a trade-weighted basket of currencies, is essentially flat ahead of non-farms, while the US 10-year Treasury bond yield has reached a day high of 1.604%, the highest since 23 August.

1.20pm BST

Powell is odds-on to loosen monetary policy, according to data from CME Group.

Investors' market bets imply a probability of more than 90% that the Federal Reserve will cut interest rates by 25 basis points (0.25 percentage points) at its next meeting on 18 September.

1.15pm BST

Manufacturing data have been weak in the US recently, but jobs numbers from private payrolls provider ADP were relatively strong, giving economists a mixed picture of where the US economy may be heading.

Lukman Otunuga, an analyst at forex firm FXTM, said:

The non-farm payroll report for August is projected to show an increase of 160k jobs created and the unemployment rate holding steady at 3.7%. Should the US jobs report meet or exceed market forecasts, this should cool speculation over deep Fed rate cuts, ultimately supporting the dollar.

1.10pm BST

And now let's have a look ahead to the US jobs numbers, due shortly.

The headline non-farm payrolls number is expected to fall, from 164,000 in July to 158,000 for August, if economists' average forecasts are to be believed.

1.00pm BST

Wetherspoons' boss Tim Martin has pledged to slash the price of lagers, spirits, wine and cider if the UK leaves the EU, after shaving 20p off a pint of ale to illustrate the Brexit benefits he expects for drinkers.

Martin has been one of the most vociferously pro-Brexit figures in the world of business, repeatedly insisting that leaving the European Union, even without a deal, will mean cheaper prices for customers.

Related: Wetherspoons pledges cheaper booze as a post-Brexit tonic

12.55pm BST

Could Boris Johnson's hoped-for election spell the end of bank bonuses?

If it continues and the City hasn't learnt its lesson, we will take action, I'll give them that warning now. If we have to take action, we will. People are offended by bonuses.

12.47pm BST

US stock market futures have gained ahead of the jobs report.

Futures for the S&P 500 benchmark index have gained 0.37%, Dow Jones industrial average futures have gained 0.4%, and Nasdaq 100 futures are up by 0.3%.

12.13pm BST

The news yesterday that the US and China will resume trade talks next month - coupled with a relatively strong private-sector estimate of jobs growth - have given investors a bit of appetite for riskier assets as we head towards the non-farm payrolls data.

Precious metals have taken a bit of a hammering today, with gold prices down by 0.9%. Gold is generally considered a safe haven investment by investors, so prices fall when investors are feeling more confident about the outlook.

11.38am BST

Boris Johnson's decision to prorogue parliament for five weeks is legal, the high court in London has ruled.

In a judgment handed down by three of the most senior judges in England and Wales, the prime minister was found to have acted lawfully in the advice he gave to the Queen to suspend parliament from next week, writes Owen Bowcott.

Related: Boris Johnson's prorogation of parliament is lawful, high court rules

11.34am BST

A fun fact from Reuters' UK economics correspondent, Andy Bruce: more Britons than ever before have no idea what is going on with monetary policy.

Record proportion of UK public (28%) have no idea where interest rates are heading, according to @bankofengland survey.

Perhaps understandably! pic.twitter.com/lxYow6acvv

11.19am BST

We know that there is a world of difference between the economies of London and some of the UK's other regions. Some really interesting data from the Office for National Statistics (ONS) put some numbers on the diverging fortunes of people in the capital and elsewhere.

London's economy has outstripped all other English regions with a 19% surge in growth since 2012, according to data compiled from VAT returns from businesses, rather than the usual surveys used to measure economic growth.

Related: London's 19% economic surge underlines divide with rest of England

11.05am BST

Even the world's second-largest economy needs some help from time to time. As a trade war with the US dents growth, and with fears of a recession rising in countries including Germany and the UK, China is stimulating its economy.

China's central bank has announced another round of stimulus today: the People's Bank of China has cut the amount of money banks have to hold against their loans, in an effort to make them lend more.

China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing a total of 900 billion yuan (102bn) in liquidity to shore up the slowing economy.

The People's Bank of China (PBOC) said on its website that it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks, with an additional cut of 100 bps for some qualified banks.

10.34am BST

The FTSE 100 has turned positive for today: it's now up by 0.15%.

Reuters is crediting the weaker pound (although it remains little changed from earlier today - still around the $1.23 mark against the US dollar).

10.18am BST

Eurozone growth came in unchanged on its third estimate: 0.2% growth in the second quarter of the year.

A minor beat on the headline year-on-year growth rate, remaining at 1.2% against 1.1% expectations, but otherwise no shocks.

9.59am BST

Labour has confirmed that it will not vote for an election on Monday even if a bill intended to stop a no-deal Brexit passes before then.

If we vote to have a general election, then no matter what it is that Boris Johnson promises, it is up to him to advise the Queen when the general election should be. And given that he has shown himself to be a manifest liar, and someone who has said that he will die in a ditch rather than stop no deal, and indeed his adviser, [Dominic] Cummings, has been swearing and shouting at MPs saying they are leaving on 31 [October] no matter what, our first priority has to be that we must stop no deal and we must make sure that that is going to happen.

Related: Brexit: Labour confirms it will not vote on Monday for early election - live news

9.42am BST

Industrial production would have to increase by a total of more than 2.5% in the coming two months just to return to the level of the second quarter, according to Carsten Brzeski, chief economist at ING Germany.

Not impossible but currently very unlikely.

Who still remembers last summer when the biggest problem for the German economy was supply-side constraints? The lack of demand has now become one of the most pressing issues.

At least in the short run, the prospects for German industry remain bleak. Even with a magnifying glass, it is impossible to find signals of an imminent rebound. Shrinking order books, high inventories and continuing external uncertainty do not bode well for the coming months.

9.34am BST

Let's get a bit more on the main development so far this morning: that drop in German industrial production.

The signs are not good for the German economy, according to Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. He said:

The July industrial production headline combined with the dreadful retail sales number now send a convincing signal that the German economy is in recession. The August and September numbers could still spring upside surprises, but we don't have high hopes.

9.01am BST

A sterling update: after a dramatic week of Brexit news, so far today the pound has started the day on a more even footing.

Against the US dollar the pound is down by 0.2% today, but remains just above the $1.23 mark reached yesterday. It is struggling a bit more against the euro, with the pound down by 0.3%, just above a1.11.

Related: Sterling bounces back to five-week high as Brexit delay expected

8.42am BST

House prices across Britain held steady in August, as the continued strength of employment numbers and a lack of supply made up for the Brexit chaos.

While ongoing economic uncertainty continues to weigh on consumer sentiment - with evidence of both buyers and sellers exercising some caution - a number of important underlying factors such as affordability and employment remain strong.

Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should also not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.

8.27am BST

We've got two posts in without a mention of Brexit. That brief hiatus is now over.

The company set a pretax profit target of 3.3bn over the six years to April 2025, with profit in any one year expected to be between 500m and 700m. It posted pretax profit of 775m in its latest financial year ended 30 April.

8.13am BST

The FTSE 100 has fallen back in early trading, down 0.25%, despite a slightly lower pound (usually a boost to the blue-chip index's multinationals).

It's fairly flat otherwise on European stock markets. Germany's Dax rose by 0.2%, while France's Cac 40 was flat.

7.59am BST

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

Economists think that storm clouds are gathering across the global economy, and few indicators have been flashing as constantly as those tracking German industry.

#Germany Industrial Production month-on-month at -0.6% https://t.co/Wet9gUUlEY pic.twitter.com/E03lCxxKPE

There is still no sign in the latest surveys that the manufacturing recession is bottoming out. The average reading of the manufacturing PMI in July and August was very low (just over 43) while the Ifo business climate for August fell to its lowest level since November 2012.