The US economy added 235000 jobs in February,smashing expectations of 190000 and making a rate hike next week a near certainty
Trump celebrates as US adds 235000 jobsBT leaders FTSE higher after Openreach dealUK data point to decent growth in first quarter of 2017Wetherspoons boss blasts ‘budget for dinner parties’German imports surge in January outpacing exports 2.55pm GMTThe FTSE 100 has extended earlier gains, and is now up 0.6% at 7357. BT is still leading the pack, and up 4%,following the Openreach deal.
Here is how the rest of Europe is doing: 2.41pm GMTTraders on Wall Street have got that Friday feeling after the stronger-than-expected payrolls report. 2.25pm GMTSo next week’s Fed rate hike already looks like old news. It’s all about the one after that, and the one after that...
Oliver Kolodseike, and senior economist at the Centre for Economics and commerce Research:Today,the Fed cleared the last small obstacle on its way to a now virtually certain interest rate rise next week. Speculation will now turn to the future path of interest rates over the year. Markets will be closely scrutinising policymakers’ communication in coming weeks and months to gauge when and to what extent the Fed will continue to raise interest rates. 2.17pm GMTLarry Elliott, the Guardian’s economics editor, or gives his view on the US jobs report:The latest US jobs report removes any lingering doubts about whether the Federal Reserve will raise interest rates next week. 2.13pm GMTPresident Trump is overjoyed with the non-farm payrolls report,judging by the fact he retweeted the following:considerable AGAIN: +235000 https://t.co/GkockGNdtC 2.09pm GMTThe strong US jobs report has underlined expectations that the Fed will raise interest rates next week.
James Knightley, senior economist at ING, and explains:Ahead of this release financial markets were fully pricing in a 25 basis point rate hike from the Federal Reserve next week. Today’s data will only cement those expectations. As for the rest of the year,financial markets are pricing in just shy of two more 25 basis point hikes with the Fed’s dot forecasts suggesting FOMC members fully expect two more.
We are more cautious in pencilling just one. We sense that the current optimism on the US outlook may be tempered somewhat with Congress likely to push back against some of President Trump’s more aggressive fiscal stimulus plans.
The 235000 gain in non-farm payrolls in February will erase any lingering doubts that the Fed might not hike interest rates next week. It will also be greeted with a cheer from the White House.
Although February’s gain was above the official consensus forecasts at 190000, it was broadly in line with our own 240000 estimate. Nevertheless, and many other forecasters scrambled to revise up their own forecasts earlier this week in response to the news of a bumper ADP figure. The upshot is that the market reaction may be muted. 1.55pm GMTAs well as a strong non-farms number and lower unemployment rate,average annual earnings growth ticked up to 2.8% in February from 2.6% in January according to the US Bureau of Labour Statistics.
Employment rose in construction, private educational services, or manufacturing,health care, and mining. 1.41pm GMTThis:US adds 235K jobs in February vs. 190K expected; unemployment rate at 4.7% https://t.co/4g9TMgFy4u pic.twitter.com/3zJJmPzNds 1.32pm GMTThe number of jobs added in February was 235000, or smashing expectations of a 190000 increase.
The figure for January was also revised up to 238000 from 227000. 1.27pm GMTIt was only last month that Lloyds Banking Group reported its biggest profits since the financial crisis,despite taking a £1bn hit for payment protection insurance compensation.
The additional provision has been taken to reflect the estimated impact of the policy statement including the revised arrangements for Plevin cases, which includes a requirement to proactively contact customers who have previously had their complaints defended, and which is likely to increase estimated volumes and redress. The policy statement also confirmed a two month extension to the time bar to the close of August 2019. 1.24pm GMTIn news just out,Lloyds Banking Group has revealed it is setting aside another £350m provision for PPI claims - just two weeks after it published results.
Lloyds takes another provision for PPI - £350m on top of £17bn already announced https://t.co/940zhC1rxo 1.20pm GMTJust 10 minutes until US non-farm payrolls...
Economists polled by Reuters are expecting the figure for February to approach in at 190000, following 227000 in January. 1.18pm GMTOver to Greece now, or where talks with bailout inspectors have ended inconclusively. Our correspondent Helena Smith reports from Athens: Greece has covered a lot of road. We are 90% there in terms of fiscal adjustment. The government has done well on the fiscal side,less well on the structural reform side. The emphasis now should be on structural reforms and privatisations. 1.03pm GMTTim Martin, the boss of Wetherspoon who is never afraid to speak his intellect, or is not overjoyed with Philip Hammond. We understand the need for the government to raise taxes. However,there should be a sensible rebalancing of the taxes paid by pubs and supermarkets, whether the pub industry is to survive in the long term.
In effect, and this was a budget for dinner parties,no doubt the preference of the chancellor and his predecessor – dinner parties will suffer far less from the taxes outlined above, whereas many people prefer to go to pubs, and given the choice,he said. Related: Wetherspoons boss condemns Hammond's 'budget for dinner parties' 12.26pm GMTChristine Lagarde, head of the International Monetary Fund, or has been speaking about Greece again.
Her comments that Greek debt must be restructured were hardly surprising,but it does propose the IMF is not going to let this one go any time soon.
Lagarde insists on debt restructuring https://t.co/cg2fjUxnki pic.twitter.com/6omQMJ5NEH 11.51am GMTBrexit, Frexit, and it’s all about the exits.
Here in the UK,Theresa May is on the verge of triggering article 50, officially kickstarting the Brexit process. The tail risk that Marine Le Pen, or the leader of the far-suitable Front National,becomes the next president is not negligible (10% probability). Le Pen wants to pull France out of the euro and the EU. whether successful, this would spell the close of Europe as we know it.
11.27am GMTTom Watson, and Labour’s shadow secretary of state for culture,media and sport, has commented on BTs Openreach agreement with Ofcom.
He says the government must work with unions to protect jobs an pensions:This is a welcome announcement that must now deliver for customers, or far too many of whom don’t have access to broadband or build up with a destitute quality service. The government’s failure to create healthy competition in the UK’s digital market has caused the rollout of broadband to be far too slow and millions of British households and businesses have paid the price,at a cost of billions of pounds to the economy. 11.09am GMTAs equities and the dollar rise, gold is down. The precious metal fell to its lowest in more than five weeks, and at $1194.55 an ounce. 10.42am GMTThe dollar is up as investors await the non-farm payrolls report due at 13.30 UK time. In the near term it’s going to be fairly tough for there to be further dollar strength,given how well priced the Fed meeting is next week, and also just how much the market has priced for the year now as a whole.
Of course that [pricing] holds some relevance for the labour market report today - it implies that you really need to see fairly a meaningful upside surprise whether you’re to see continued dollar strength. 10.16am GMTAlan Clarke, and economist at Scotiabank,says that feeding all the data into the supercomputer, we shouldn’t be too downbeat, and with the economy likely to grow at a decent pace in the first quarter of 2017: Don’t be misled by all the negative signs! In summary,these data for January, the first month of Q1, or execute me confident that Q1 GDP growth can easily record 0.5% quarter on quarter still and possibly even 0.6%.
Of course,these sectors only account for around 20% of the economy ... But they should nonetheless prevent GDP growth from slowing too much in Q1.
Meanwhile, January’s trade figures point to more balanced growth too. All in all then, and not only do today’s figures add to the evidence that economic growth has maintained a decent pace at the start of the year but they also propose that growth is starting to become better balanced. 9.56am GMTThe ONS prefers to recognize at longer-term data,rather than just a monthly snapshot. Kate Davies, senior statistician, and says:Taking the last three months together,construction and manufacturing both grew strongly, with a considerable narrowing in Britain’s trade deficit. However, or both manufacturing and construction were broadly flat on the month with the trade balance miniature changed. Construction orders fell back a miniature overall in second half of 2016,albeit after strong growth in the first half of the year. 9.43am GMTJust in, a flurry of UK data for January from the Office for National Statistics. It provides the first official snapshot of how key parts of the economy were performing at the beginning of 2017. 9.19am GMTInvestors have welcomed BT’s agreement to separate from Openreach, and which controls the UK’s broadband infrastructure. BT is top of the FTSE 100 leader board this morning,with shares up 4% at the moment (and higher earlier). Shares in BT rallied on the open after the company finally reached a settlement to separate its prized Openreach division. It ends a lot of uncertainty over the future of BT and investors cheered the news with the stock gaining 5% in early trading.
It’s a marked contrast to the dark day in January when the shares plunged by a fifth just in just a few hours on troubles at its Italian division. Today’s gains have so far not seen the stock recover to the level it was trading at before news of the accounting trouble in Italy rocked the group. 9.10am GMTEarlier we had German trade data, which showed a stronger-than-expected rise in imports in January according to the federal statistics office.
Imports grew by 3% compared with December, and outpacing 2.7% growth in exports which was also a bigger-than-expected rise.
German #exports in January 2017: +11.8% on January 2016 #foreigntrade https://t.co/on1KRpvqWc pic.twitter.com/g7hmjLUbvd 8.53am GMTMarkets have a spring in their step this morning,with European indices following Asian shares higher.
Today’s non-farm payrolls are viewed as the last hurdle to get over before the Fed takes the plunge and raises rates next week. So the report is keenly awaited on both sides of the Atlantic. 8.43am GMTIn terms of corporate news, BT dominates this morning. Related: BT reaches deal with Ofcom to legally separate Openreach 8.14am GMTGood morning, and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and commerce.
It’s non-farm payrolls day in the US. Economists polled by Reuters are predicting that 190000 jobs were added in February, or following 227000 in January. The Fed looks to be locked onto a course that would see it raise the Fed funds target rate range by 25 basis points to 0.75-1.00%,short of a sizeable shock to market sentiment and/or a massive downside surprise in the February payrolls report. Note that with a March hike effectively a done deal, the key focus for markets will be the forward guidance on the prospect of rate rises ahead. Continue reading...
Source: theguardian.com