Stock markets slide after 'mixed-bag' US jobs report - as it happened
173,000 new jobs were created in America in August, fewer than expected, but analysts say Fed could still raise rates this month
- Latest: More fears over global economy
- NFP misses forecast, but jobless rate hits seven-year low
- Wage growth picks up...
- ...but labour force participation still weak
- Preview: A crucial NFP day
6.09pm BST
Back with Greece, and here's Reuters' take on the latest opinion poll showing Alexis Tsipras' Syriza party in second place to New Democracy:
Greece's conservative New Democracy party has taken a tiny lead among voters over leftist Syriza before the September 20 election, an opinion poll published on Friday showed.
New Democracy has rapidly closed the gap with Syriza in recent days, and the Metron Analysis poll on Friday was the second this week to show it overtaking former prime minister Alexis Tsipras's party.
#Greece poll [MetronAnalysis/@parapolitika]: ND 24 +2.8 Syriza 23.4 +1.2 KKE 5.2 GD 5.1 Potami 4.8 PASOK 4 EK 4 LAE 3.4 ANEL 2
5.30pm BST
Another volatile week finished with further woe for investors. Among the day's data, German factory orders fell 1.4% month on month in July, but the big event was the US non-farm payroll numbers. As it turned out the headline figure disappointed, with 173,000 jobs added in August compared with the 220,000 or so expected. But the unemployment rate dipped to 5.1% and hourly wages were steady, so there were few clues as to whether the US Federal Reserve would raise interest rates this month or not.
Despite the turmoil caused by worries about China, many analysts believed there was nothing in the jobs data to prevent an increase. Equally, many others believed the Fed would keep its powder dry. The markets seemed to side with the hawks, especially since just before the figures were released, Richmond Fed president Jeffrey Lacker said the non-farm numbers should not derail the case for a rate rise.
4.58pm BST
Meanwhile Moody's has downgraded the senior debt ratings of four Greek banks to C, in the expectation that holders will suffer losses in the forthcoming recapitalisations. It said:
The downgrade...primarily reflects Moody's expectation that junior and senior debt holders will be bailed in and sustain material losses as part of the upcoming recapitalisation process...
Although Moody's expects uninsured depositors to be excluded from bail-in, as indicated by a recent Eurogroup statement, the negative outlook reflects the ratings agency's opinion that the recapitalisation process remains fluid and banks continue to face significant credit risks.
4.49pm BST
It may have been another volatile week but there is likely to be more to come. Tony Cross, market analyst at Trustnet Direct, said:
Any hopes that markets may have been through the thick of the volatility have been squarely dashed today with a combination of risk mitigation ahead of the long weekend in the US and concern as to what the Fed is supposed to do with interest rates serving to knock sentiment in markets on a global basis. London has been left nursing triple digit gains and it's the commodity stocks that are bearing the brunt.
The fact that the US jobless rate has fallen to its lowest level since 2008 has reopened the idea that the Federal Reserve could push through higher interest rates in two weeks time. This will further punish emerging markets currencies and make dollar denominated goods - like oil and metals - more expensive for many. There can be no doubting that the Fed has an enormous weight on its shoulders - calling this wrong could have wide-reaching effects.
4.14pm BST
The US Federal Reserve could raise rates faster and further than people expect, according to John Higgins of Capital Economics:
Given the lack of a clear steer from [today's] report, we continue to think that the probability of US monetary policy being tightened later this month is around 50:50. The bigger picture, though, is that we still forecast that the Federal Open Market Committee will raise the federal funds rate further and faster over the next year or so than most expect, as a tightening labour market puts significant upward pressure on wage and core inflation. Indeed, the unemployment rate has already fallen to the mid-point (5.1%) of the "central tendency" of FOMC members' latest projections of its longer-run level.
With this in mind, we think a big winner will be the dollar, as the contrast between the monetary policies of the Fed and other major central banks becomes increasingly stark. A big loser, though, could be Treasuries - even if term premiums remain low, there is plenty of scope for yields to rise as expectations for interest rates are revised up. Otherwise, while we anticipate that the US stock market will weather tighter monetary policy well, we think its upside will be capped by the squeeze on profit margins that results from diminishing slack in the labour market.
4.04pm BST
Here's a couple of charts from the Bureau of Labour Statistics release:
3.36pm BST
And here's the positive version of the jobs data from the President's twitter account:
The economy added 173,000 jobs in August-a record-breaking 66 consecutive months of private-sector job growth.
3.20pm BST
And this sums it up:
- Bank of Tokyo: "We would be shocked if Fed officials delay any further!'" - Goldman: "No hike" ... who to believe
2.59pm BST
The market slide is accelerating:
2.54pm BST
Meanwhile over in Greece, a new poll ahead of this month's election and it's not good news for former prime minister Alexis Tsipras and his Syriza party:
GREECE'S SYRIZA PARTY TO WIN 23.4 PERCENT OF VOTES AT SNAP ELECTION, NEW DEMOCRACY PARTY TO WIN 24 PERCENT - METRON ANALYSIS POLL
2.46pm BST
The jobs report muddies the monetary policy outlook, says Unicredit Research economist Harm Bandholz:
Fed Vice Chair Stan Fischer said during his Jackson Hole speech that "we now await the results of the August employment survey." If he had hoped that the numbers will speak a clear language and basically make the decision for the FOMC - in the one or other direction - he will be disappointed...
In our view, a generally risk-averse Federal Reserve does not want to risk to add to the uncertainty, and prefers to get a better sense of how the global headwinds might affect the US economy.
To be sure, that view is far from being shared by all [Federal Reserve] members. Only today, Richmond Fed President Lacker reiterated his view that the US no longer requires zero interest rates - a view that we fundamentally share. And Mr. Lacker will certainly dissent at the upcoming meeting, if the Fed leaves its target rate unchanged
But while the hawks are usually more vocal, they in our view do not have the majority to get the rate hike just yet. Other voting regional Fed presidents, such as Charles Evans and Dennis Lockhart, will probably be more than happy to stand pat for now. Finally, in a divided Committee, it is up to the Chair to forge the Consensus. And while Janet Yellen has not spoken in public about the policy outlook since mid-July (!), her approach so far has always been to err on the side of caution.
2.39pm BST
As expected, US markets have fallen back in the wake of the mixed jobs data.
The Dow Jones Industrial Average is down 204 points or 1.27% in the first few minutes of trading, while the S&P 500 is 1.01% lower.
2.34pm BST
Meanwhile G20 finance ministers and central bankers, currently meeting in Turkey, will not call on the US to delay a rate rise, Reuters is reporting:
The U.S. Federal Reserve is coming under pressure from emerging markets not to raise rates too soon as turmoil in China threatens global growth, but the G20 will not publicly call for any delay, delegates meeting in Turkey said on Friday.
Slower growth in China and rising market volatility have boosted the risks to the global economy, the International Monetary Fund warned ahead of the G20 meeting. It cited a mix of potential dangers such as depreciating emerging market currencies and tumbling commodity prices.
[But] a push by emerging market countries to characterise possible rate hikes in developed nations as a serious risk for the global economy was rejected by drafters of the G20 communique, a source from the Russian delegation said.
"Some emerging market countries wanted to fix a position," the source told reporters, when asked whether the Fed's expected rate hike would be mentioned in the communique...
2.25pm BST
Take your pick. #NFP pic.twitter.com/M2h4dUPFBU
2.24pm BST
For all those believing the jobs data makes a rate rise this month less likely, there are others believing the opposite:
34% chance of Sep hike from 30% yesterday
2.20pm BST
We warned earlier that a middling jobs report might not be good for markets.
And it turns out we were right. Europe's stock markets are falling deeper into the red, knocking at least 2% off the main indices.
"It has been a turbulent fortnight and this latest jobs data will not assuage market fears.
The August figure is an unconvincing start to the Fall and will trigger even more concern in the markets about the state of the global economy."
2.19pm BST
Millennials are still struggling to break into the labor market:
The share of prime age Americans (25-54 years old) who have jobs still has not increased at all this year. pic.twitter.com/LeWdueD7io
2.09pm BST
It may not feel like it, but the US economy has now achieved "full employment".
So says Paul Ashworth of Capital Economics:
The decline in the unemployment rate leaves it in line with the Fed's 5.0% to 5.2% estimate of the equilibrium long-run unemployment rate.
In short, the Fed just achieved the full employment part of its dual mandate.
2.05pm BST
This is a particularly difficult Non-Farm Payroll to interpret, sighs Rob Carnell of ING.
It's a "very mixed bag". And for that reason, he doesn't see the Fed raising rates this month:
The August US labour report delivered something for everyone. But in the end, we don't think it is sufficiently strong enough for the Fed to proceed with a September rate hike without markets worrying that the data is not good enough to support it.
For that, we think we needed to see less ambiguity in these numbers - e.g. a clear surge in payrolls to back up falls in the unemployment rate and rising wages. And this didn't happen.
1.59pm BST
The FT's economics editor suggests Janet Yellen and colleagues shouldn't give today's Payroll much attention:
Mixed bag US labour market figs are a perfect example why it is ALWAYS nuts to base policy on monthly data
1.58pm BST
Analysts aren't really sure what to make of this Non-Farm Payroll report.
One the one hand, fewer jobs were created than expected, suggesting the jobs market is weakening.
This is just about what a labour market report would like if *designed* to give few clues about the Fed.
1.55pm BST
At 62.6%, the US labor force participation rate is actually the joint-lowest rate since 1977.
That helps explain how the unemployment rate has dropped so much -- as it doesn't include Americans who have dropped out the jobs market.
1.51pm BST
There are still 8.0 million unemployed in America, the BLS says. That includes 2.2 million who have been unemployed for at least 27 weeks.
And 6.5 million people were working part time for economic reasons in August.
1.49pm BST
America's health care, social assistance and financial services firms all took on more staff last month, reports the Bureau for Labor Statistics.
Manufacturing and mining firms shed jobs, though.
1.41pm BST
The 'underemployment rate', which measures whether people want to put in more hours, also dropped last month to 10.3% from 10.4%.
"Underemployment" is declining alongside official unemployment rate, although still above prerecession level. pic.twitter.com/tJMgCoJMl4
1.40pm BST
US workers' hourly earnings beat expectations last month.
They rose by 0.3% in August, to $25.01, which is a 2.2% gain on last year. Wall Street expected 2.1%.
1.38pm BST
The Labor Department points out that August's initial non-farm payroll reading tends to be revised up in future months (as mentioned earlier)
1.37pm BST
July's payroll has been revised up from 215,000 to 245,000, making up for some of August's shortfall.
June has been revised up by 14,000.
1.32pm BST
Here we go!
173,000 new jobs were created across the US economy last month, according to the Non-Farm Payroll.
BREAKING: US created 173,000 jobs in Aug vs 220,000 expected; unemployment rate at 5.1% http://t.co/tjCRv48D4Z
1.29pm BST
Just one minute to go.....
1.23pm BST
Could Jeffrey Lacker suspect that today's report will miss forecasts, so he's getting his rebuttal in early by arguing that it doesn't matter too much?
Hint from Lacker? "Should the US jobs report for August turn out to be a weak one, it shouldn't deter the #Fed from raising rates this year"
1.17pm BST
Heads-up: Jeffrey Lacker, the president of the Richmond Fed, is arguing that today's non-farm payroll shouldn't derail the case for raising rates.
In a speech in Richmond, Lacker, a hawkish Fed policymaker, says that a poor August report would be a "one-month blip" that shouldn't distract from the recent labour market recovery.
"I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring."
Lacker says he has not made up his mind yet, will listen to debate at Sept FOMC.
12.56pm BST
The final, and most important, economic news of the week is going to be released in just 30 minutes time.
The US employment report is published at 1.30pm BST, or 8.30am EDT, giving important new insight into the state of America's economy.
Given that the Fed is comfortable with the broad trend of job growth, a strong number would improve the atmosphere for a September rate hike."
This is a grey area and the scenario I feel would actually prove to be the worst case for market participants.
If you are an economist who has September or October pencilled in for Fed rate hikes then you probably wouldn't amend that view, but the growth in job creation is lacklustre and would provide the least amount of clarity.
BAML says the worst payrolls result for risk would be "a stinker" eg under 125K. #stinker
Since 2010, no month has been upwardly revised more than August cc: @steveliesman pic.twitter.com/gDqXTkXkG7
11.53am BST
More gloominess, this time from airline industry group IATA.
"The combination of China's continued shift towards domestic markets, wider weakness in emerging markets, and slowing global trade indicates that it will continue to be a rough ride for air cargo in the months to come."
11.25am BST
The futures markets suggests US stocks will fall by around 1% when Wall Street opens in three hours time.
However, the US jobs report comes an hour earlier, and will have a major impact on the markets. Although as explained earlier, we could get a 'middling' reading that doesn't give much clarity.
11.09am BST
10.31am BST
The selloff in Europe is accelerating, pushing the FTSE 100 down by 101 points or 1.6%.
Almost every share is down, led by retailers after it emerged August was the worst month for the sector since 2008:
Related: UK high street has worst month since 2008
It looks like the flip-flopping nature of markets is set to continue this Friday; after the Draghi-boosted highs on Thursday afternoon, the European indices seem to be in the midst of a harsh come-down this Friday morning, with all the major indices falling by over a percent.
So its official then, we were over enthusiastic yesterday? #FTSE #DAX #CAC #INDU pic.twitter.com/KFHIp2lnMm
10.05am BST
The slump in German factory orders in July (see 8.03am) shows that the Chinese slowdown is hurting, say economists.
Ulrike Kastens, economist at German private bank Sal. Oppenheim, said the fall in factory orders in July was "disappointing," though the "modest" upward trend in German industry continues thanks to growth in recent months.
"This will be a drag on German exports in coming months and will also dampen prospects for the world economy."
"But the main problem is what happens to global trade. Orders from the rest of the world fell by nearly 10%. There aren't enough growth drivers in the global economy. The USA looks solid, but many developing countries such as China, Brazil and Russia are under pressure. Countries that depend on raw materials like Canada and Australia are also struggling."
9.51am BST
The European Central Bank has shaken off its anxiety over the eurozone economy, and pressed on with installing a large artwork shaped like a tree outside its headquarters.
No that's not a joke.
@ecb The tree is currently installed and nice pic.twitter.com/5NCzUdtBPC
9.28am BST
The G20 will also resist blasting Beijing over the turbulence caused by its recent devaluation of the yuan, according to CNBC's Steve Sedgwick.
#G20 Sources telling me (not unsurprisingly) NO criticism or even mention of #China specifically in draft Communique.
9.25am BST
There are four challenges facing finance chiefs at their G20 meeting, Luxembourg finance minister Pierre Gramegna tells Bloomberg TV.
9.05am BST
The prospect of a US interest rate hike is worrying top finance ministers and central bankers as they gather in Ankara for the G20 meeting.
A draft communique, seen by Bloomberg, warns that:
In line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies, which may remain one of the main sources of uncertainty in financial markets.
8.45am BST
Look who's back!
Yanis Varoufakis, the former Greek finance minister, has just told CNBC that he won't back Syriza's Alexis Tsipras in the general election on September 20th.
BREAKING: Yanis Varoufakis tells CNBC: I'm not endorsing Tsipras in this election; he is still a friend but we have political disagreement
LIVE: Varoufakis: A 10 year old would know that (Greece's debt situation) would not end well http://t.co/bJppuJzX5m pic.twitter.com/auHdpiRG98
8.31am BST
So much for the Draghi rally.
Europe's stock markets are sliding back as trading gets underway.
A fair chunk of yesterday's gains have been wiped off London's FTSE-100 index in the first few minutes of trade this morning with selling in the latter part of yesterday's Wall Street session clearly taking a toll on sentiment.
Traders are now looking at screens awash with red numbers and even if today's non-farm payrolls are seen as having no meaningful implications in driving a September rate hike, the Fed still has time to act before the year is out. Yesterday's nascent rebound for commodity prices is also looking to be rather short lived - crude oil is slumping once again and as a result it's little surprise that the natural resources stocks have been shunted towards the foot of the index.
8.18am BST
John Lewis, that barometer of UK high street spending, has reported that sales at its department stores slid by 3.4% year-on-year in the last week of August. Not a great signal.
It admitted that "a tough trading period closed with another difficult week", but is pinning its hopes on targeting "pent-up demand" in September.
8.03am BST
We also have fresh signs of weakness in Europe's powerhouse economy this morning.
Eurgh...some rather horrible factory orders from Germany -1.4% July vs June...much worse than expected
7.55am BST
A fresh bout of gloom swept Japan's trading floor today, pushing the Nikkei index down by 2% to a fresh seven-month low.
Nikkei tumbles 2.2% to 17792.16 lowest since Feb on global de-risking. Falls 7% this week, worst week since Apr2014. pic.twitter.com/JZfgn3BoZ0
Japanese wages: still stagnant http://t.co/Zgxe0rtST3 pic.twitter.com/qGRidw0qWs
7.37am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today is all about the US jobs report, and the possibility that the long run of record low interest rates is about to end.
Good Most-Important-NFP-ever-Day Morning
Our European opening calls: $FTSE 6106 down 88 $DAX 10155 down 163 $CAC 4576 down 77 $IBEX 9867 down 176 $MIB 21829 down 348
I guess #Draghi's speech never made it to Asia. #Nikkei turns sharply lower. pic.twitter.com/uSbxCOAzIo
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