Get all your news in one place.
100's of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 1.45) and Nick Fletcher

EU jobless rate hits seven-year low; US data mixed – as it happened

The City of London financial district.
The City of London financial district. Photograph: Antonio Zazueta Olmos/Antonio Olmos

The closing scores on European markets showed:

  • The FTSE 100 fell 40 points or 0.64% to 6230.79
  • Germany’s Dax dropped 0.68% to 10,262.74
  • France’s Cac closed 0.53% lower at 4505.62
  • Italy’s FTSE MIB fell 1.45% to 18,025.25
  • Spain’s Ibex ended down 0.91% at 9034.0
  • But in Greece, the Athens market added 0.93% to 646.97

On Wall Street the Dow Jones Industrial Average is currently down 88 points or 0.5%.

On that note it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Inmarsat looks set to leave the FTSE 100 in the quarterly reshuffle announced on Wednesday. The changes are based on Tuesday’s closing prices, and its near 4% fall making it the day’s biggest faller in the index has confirmed the inevitable. The changes need to be ratified on Wednesday, but it’s pretty safe to say Inmarsat will be replaced by Hikma Pharmaceuticals, as forecast.

Companies set to be demoted from the FTSE 250 are:

Jimmy Choo, Highbridge Multi-Strategy Fund, Interserve, Lookers, Melrose Industries, Northgate and Ophir Energy.

They are likely to be replaced by:

Ascential, CMC Markets, Countryside Properties, CYBG, Hill & Smith, Metro Bank and Smurfit Kappa Group.

Updated

Markets end lower

European markets have ended the last day of the month on a downbeat note, with declines accelerating through the day after a Guardian/ICM poll showing the Brexit camp firmly in the lead ahead of June’s EU referendum.

The poll knocked sterling lower which in turn unsettled equity investors. Mixed signals from the US economy also took the shine off shares. Markets had seemingly been taking the prospect of a US rate rise, perhaps as early as June, in their stride, supported by the idea that at least the US economy was showing signs of strength. But ahead of the non-farm payrolls figures due on Friday, weaker consumer confidence and manufacturing figures put a bit of a dent in that theory.

There was also some caution ahead of some key events this week. As well as non-farms there is the latest meeting of the European Central Bank and a get-together of Opec ministers.

So the FTSE 100, which had been heading for a fourth successive monthly rise, actually ended May slightly in the red. But European shares fared better, with the Stoxx 600 index rising 1.7% on the month, its best performance since October.

With metal prices hit by the stronger dollar, copper declined more than 7% in May, the biggest monthly fall since November. Gold has lost nearly 6%, again its worst peformance since November.

Oil has recorded its fourth monthly rise in a row, helped by output disruptions from Nigeria, Libya and Canada.

With markets slipping lower, Joshua Mahony at IG said:

What looked like a boring day in the markets has been kicked into gear as the European indices fell sharply after a surprise EU referendum poll in favour of the ‘leave’ campaign. Most notably, with the FTSE attempting to break out of its 30 point range that has dominated the past week, this could set the groundwork for a very volatile week. Today has seen a substantial amount of data released, and with a whole week of economic data risk ahead, traders will be wary of increased unpredictability in the coming days.

Then there is the US data:

At a time when markets have been seemingly focusing on the positives of a stronger economy rather than the looming possibility of a rate hike, today’s data highlights the fact that while a hike is likely, consumers may not feel so optimistic. Today’s rise in the Fed preferred core PCE measure of inflation paves the way for a potential hike in the summer, yet with consumer confidence on the wane, it is clear the everyday person is not looking forward to the prospect of higher rates.

Pound falls as Guardian polls show Leave camp ahead

Two Guardian/ICM polls showing voters moving in favour of the UK leaving the European Union have helped send sterling to a one week low against the dollar and euro.

The pound fell nearly a cent to $1.4547 after news of the polls, while the euro rose 0.8% to 76.72p.

As a consequence, stock markets are slipping back on concerns about the disruption which might be caused by a Brexit vote. The FTSE 100 is down 0.4% while the Dow Jones Industrial Average is 0.3% lower.

See the latest EU referendum developments in our live blog here:

Updated

And another May miss.

The Dallas Fed Texas manufactuing index has come in at -20.8, down from -13.9 in April and well below expectations of a figure of -8.

Updated

And more on the Chicago PMI numbers:

Updated

On the confidence figures, Lynn Franco at the Conference Board said:

Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April. Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.

US consumer confidence disappoints

So after a couple of pieces of US data which beat expectations, we have two in a row which have disappointed.

The US consumer confidence index came in at 92.6 in May compared to forecasts of 96. This is down on the April figure of 94.7 (itself revised up from 94.2).

This is the lowest level for the Chicago PMI since February and the sixth time it has been in contraction over the past 12 months.

Index compilers MNI said: “Barring a solid revival in June, the second quarter could be the weakest outturn since the fourth quarter of 2015 given the April-May average of just 49.9.”

Chicago PMI
Chicago PMI Photograph: MNI Indicators

MNI chief economist Philip Uglow said:

While expectations are that growth in the US economy will bounce back in the second quarter, the evidence from the MNI Chicago Report shows activity weakening from an already low level. Firms ran down stocks at the fastest pace for more than 6 years in May, and while a rebuilding over the coming months could support output, the underlying message appears to be that businesses are not confident about the outlook for growth.

After the earlier strong US economic data, the Chicago Purchasing Managers Index has come in weaker than expected in May.

The index fell from 50.4 in April to 49.3, below estimates of a level of 50.7. Anything below 50 signals contraction.

More for the Federal Reserve to think about.

Updated

Wall Street flat at open

Back in the US, and markets have opened virtually unchanged after the day’s economic data came in stronger than expected and renewed talk of a possible rate rise next month. On Friday Fed chair Janet Yellen said an increase would be appropriate in the coming months.

Investors remain cautious however ahead of Friday’s non-farm payroll numbers, the last before the Fed’s June meeting.

So the Dow Jones Industrial Average is down around 8 points or 0.04%, torn between the prospect of a rate rise and the data showing the economy is growing more strongly than expected.

Here’s our story confirming that 1,000 jobs are to go as 120 Austin Reed stores are shut:

More fuel for the members of the Fed who want to raise rates before long: better than expected housing figures.

US single family house prices rose 5.4% in March on a year on year basis, the same as the previous month and higher than forecasts of a 5.2% increase, according to the latest S&P/Case Schiller index. David M. Blitzer at the Index Committee said:

The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates. Another factor behind rising home prices is the limited supply of homes on the market.

US consumer spending jumps

Just in..... personal spending across America rose by a chunky 1.0% in April.

That beats estimates of a 0.7% rise, and is the biggest jump since August 2009. It suggests US consumers were pretty upbeat about economic prospects last month.

Reuters explains:

The Commerce Department said on Tuesday consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.0 percent last month as households bought automobiles and a range of other goods and services.

The Commerce Department also reports that personal incomes in America rose by 0.4% in April. That’s in line with expectations, and means that spending is outstripping income growth.

It may fuel the debate about whether the Federal Reserve could, or should, raise interest rates....

Updated

Good news! Portugal is growing twice as fast as we thought. Bad news! Portugal only grew by 0.2% in the last quarter.

That’s according to the Lisbon stats office, which has revised up the initial growth estimates (from 0.1% to 0.2%) today (the FT has more details).

It means the Portuguese economy has now grown for the last two years, but not fast enough to eliminate fears about the country, which was bailed out in 2011.

Portuguese GDP over the last decade
Portuguese GDP over the last decade Photograph: FT

Today’s jobless report also showed that Portugal has the fourth-higher unemployment rate in the EU, at 12%.

Updated

Why June will be volatile

Investors should enough the quiet of May while they can, because June is going to be very dramatic.

Britain’s vote on EU membership will obviously be huge, while America’s central bank’s monetary policy meeting could also move global markets.

Mihir Kapadia, CEO at Sun Global Investments, says:

‘’As the month of May comes to an end, June looks likely to be even more volatile – with a potential US interest rate hike, the EU referendum in the UK and the price of oil being key risk factors for a market that has been on edge for the entire year.

May was a month where expectations of interest rate increases in the US were brought forward, with the Fed’s Bullard the latest prominent voice to suggest that a hike is approaching fast. This week, the markets will be looking to the May non-farm payrolls data on Friday – a strong jobs number will be seen as providing the Fed with the data needed to push ahead with an interest rate hike in June.’’

Swiss bank UBS is also predicting plenty of action:

A reminder that it’s a big week for US economic data, especially for those wondering if the Federal Reserve will raise interest rates next month.

It starts with US personal income figures for April, in an hour’s time, followed by the consumer confidence report at 3pm BST.

Updated

Developments in Athens....

The drop in European unemployment hasn’t improved the mood in a rather damp City.

All the main stock markets are now in the red, as May drags to an end.

Europe's main stock markets today

The news that the eurozone is still experiencing negative inflation may be weighing on spirits, as Conner Campbell of Spreadex explains:

The Eurozone-wide inflation figure, meanwhile, came in at an expected -0.1%. That is an improvement on the -0.2% seen last month, but still means that the region has spent more of 2016 in deflation territory than it has not despite the influx of new stimulus measures back in March.

None of this news provided much cheer for investors.

Updated

Over in Greece, scuffles have broken out between protesting port workers and riot police.

The dock workers are demonstrating in the Greek capital, against plans to privatise Piraeus, the largest port in Greece. They fear the sale, which is demanded by creditors, will cost jobs.

Port workers shout slogans during a demonstration against the privatisation of Greek ports, outside a hotel where an extraordinary general meeting of the Piraeus Port Authority S.A (OLP) takes place, in Athens, Greece, May 31, 2016.
Port workers shout slogans during a demonstration against the privatisation of Greek port in Athens. Photograph: Alkis Konstantinidis/Reuters
Dock workers scuffle with riot police in central Athens during a protest against the planned privatization of the port of Piraeus under new creditor-demanded reforms, on Tuesday, May 31, 2016.
Dock workers scuffle with riot police in central Athen. Photograph: Petros Giannakouris/AP

The workers have already been on strike for six days, in the latest show of opposition against Greece’s austerity programmes.

The Kathimerini newspaper has more details:

Fearing layoffs, port workers have been on 48-hour rolling strikes since last week and have said they will not return to work unless their requests are addressed.

“Everything, taxes, bills, the living cost, is going up. Daily food has become more expensive. And myself, I don’t know if I have job tomorrow,” said port worker Antonis Peristerakis, 49, father of two children. “I need security. I want to have food for my children. I don’t want to look for a job at the age of 49.”

Report: 1,000 jobs lost under Austin Reed rescue deal

A Stock clearance at Austin Reed flagship store on Regent Street, London
A Stock clearance at Austin Reed flagship store on Regent Street, London Photograph: Matthew Chattle/REX/Shutterstock

Back in the UK, almost 1,000 jobs are being lost as part of a deal to ‘rescue’ high street tailor Austin Reed.

That’s according to the Daily Telegraph’s Ben Marlow, who writes:

The majority of Austin Reed’s stores will close with the loss of nearly 1,000 jobs after administrators to the collapsed menswear chain were only able to find a buyer for its famous brand and stock.

Sources familiar with the negotiations said Edinburgh Woollen Mill had refused to take the bulk of the shops as part of a deal, meaning administrators will now begin an orderly ‘wind down’ of the chain’s estate in the coming days.

The move comes a month after Austin Reed went into administration, handing control of the company to AlixPartners.

AlixPartners had hoped to find a buyer for some, or all, of the business. Dragons’ Den star Touker Suleyman, and Sports Direct chief Mike Ashley, had both emerged as possible options.

Updated

Europe's youth unemployment crisis continues

Young people are still bearing the brunt of Europe’s unemployment problem.

The youth jobless rate in the EU has dropped to 18.8%, from 20.7% in April 2015. That still leaves 4.2 million under-25s out of work across the region.

In the euro area, the youth unemployment rate is now 21.1%.

And again, the situation is much worse in some countries than others. The lowest rates were observed in Germany (7.0%), Malta (8.9%) and the Czech Republic (9.5%), and the highest in Greece (51.4% in February 2016), Spain (45.0%), Croatia (38.9% in the first quarter 2016) and Italy (36.9%).

Martin Janicko, economist at Moody’s Analytics, also believes Europe’s labour market is improving...

“The euro zone’s unemployment rate was 10.2% in April, unchanged from the previous month but down from 11% a year earlier.”

“Declines in the jobless rate were recorded in most euro zone countries. Particularly encouraging are drops in joblessness in Greece, Ireland, and Spain. Periphery countries have had the largest drops over the past few months, reflecting their rebound, while the European core broadly held ground. Nevertheless, headline unemployment and youth unemployment rates are still elevated in the euro zone, with only Germany reporting a youth unemployment rate below 10%.”

“The downward trend in the jobless rate will likely persist in coming months, reflecting improving economic conditions around the monetary bloc, labour market reforms, and a strengthening industrial base in Spain, Portugal and Ireland. Businesses and consumers should benefit from easier access to credit following the easing of lending standards and a monetary stimulus from the European Central Bank.”

Eurozone in deflation: What the experts say

Here’s some reaction to the news that the eurozone inflation rate remains negative this month, at -0.1%.

Joshua Mahony, market analyst at IG, says inflation remains “within the doldrums”; even though the European Central Bank is running a huge bond-buying QE programme and record low interest rates.

Despite the ECB embarking on a substantial round of easing, the fact that the Eurozone remains within deflation is a clear heads up that monetary policy alone cannot fix the problem of stagnant price growth.

Holger Zschaepitz, journalist at Die Welt, points out that the ECB has massively expanded its balance sheet recently, in an attempt to drive up inflation.

But Fred Ducrozet of private Swiss bank Pictet points out that core inflation (stripping out energy and food costs) has risen:

Howard Archer, economist at IHS Global Insight, reckons today’s data shows the eurozone labour market is slowly improving.

He points out that the jobless total did drop in April, although not by enough to pull the headline rate down from 10.2%.

Eurozone unemployment fell by 63,000 in April to stand at 16.420 million, which is the lowest level since August 2011.....

The decent underlying marked drop in Eurozone unemployment in April/March suggests that the pick-up in Eurozone GDP growth in the first quarter may be feeding through to lift employment.

In detail: EU jobless rate hits seven year low

There are still stark differences in Europe’s labour markets, which partly reflects the austerity measures imposed on its weaker members.

Today’s report shows that there are 21.2 million unemployed men and women across the 28 countries which make up the EU, including 16.4 million were in the euro area.

The lowest unemployment rates were recorded in the Czech Republic (4.1%), Germany (4.2%) and Malta (4.3%).

But there’s no prizes for guessing the country with the highest unemployment rates --its Greece (24.2% in February 2016), followed by Spain (20.1%).

EU unemployment, to April 2016

Unemployment in the European Union has hit a new seven-year low of 8.7% in April.

That’s rather better than the eurozone average of 11.2%, but still means Europe is lagging behind America (where the jobless rate is 5%)

Updated

Eurozone inflation still negative

The eurozone is still stuck in negative inflation!

Prices across the single currency region fell by 0.1% in May, the flash estimate from Eurostat shows. Once again, cheap oil is mainly responsible.

Energy prices fell by 8.1% year-on-year in May, while service prices rose by 1%. Food, alcohol & tobacco gained 0.8%, while non- energy industrial goods cost 0.5% more.

No improvement in Eurozone unemployment

Here comes the splurge of Euorpean economic data, to take City traders’ minds off the weather.

And Europe’s unemployment rate remains stuck at 10.2% in April, meaning no improvement on March’s figures....

Told you it was looking a bit grim out there #splishsplashsplosh

The British pound has weakened a little this morning, as investors continue to ponder next month’s EU referendum.

Sterling is down almost half a cent against the US dollar, at $1.4601.

Despite that, the pound has still been one of the best-performing currencies in May; it strengthened after opinion polls suggested the public will vote to Remain in the EU.

But there’s still more than three weeks to go, so everything could change.

City traders are taking steps to profit from the vote. As the FT explains this morning, some firms are commissioning their own exit polls on the day, so they can either buy or sell sterling.

That’s not illegal, as long as they don’t publish the results....

Updated

Unfortunately, the Italian jobs malaise also continues...

The Italian unemployment rate has jumped to 11.7% in April, up from 11.5% in March.

Economists had expected 11.4%, so this weak reading suggests Mattei Renzi’s government is struggling to breathe life into its labour market.

But it’s not all bad new; some 51,000 new positions were created in April, according to the statistics body ISTAT.

So the rise in the jobless rate suggests previously inactive workers are now seeking a job.

German unemployment rate hits new low

The German jobs miracle continues.

Germany’s jobless rate has fallen to a new record low of just 6.1% in May, down from 6.2%. That’s the lowest since East and West Germany were reunified in 1990, as Europe’s largest economy outperforms its weaker neighbours.

Reuters has more details:

“The labour market continues its overall positive development,” Frank-Juergen Weise, head of the Federal LabourOffice said in a statement. “Unemployment fell in the course of spring. Employment rose sharply and the demand for labour also increased significantly.”

The seasonally-adjusted jobless total fell by 11,000 to2.695 million, the Labour Office said. That compares with a consensus forecast in a Reuters poll for unemployment to fall by 5,000.

A trader works in front of a board displaying the chart of Germany’s share index DAX.

Unless we get a big crash today, European stock markets will post their best month since last October.

The STOXX 600, which tracks the 600 biggest European companies, has gained 2.5% during May as investors put recent market turmoil behind them.

This flow of money into shares has come at the expense of other assets, such as precious metals. Gold has fallen by 6% this month, its worst month since November.

Updated

European stock markets have started the week in an edgy mood.

Most of the main indices have dropped, although the UK’s FTSE 100 has scrambled a little higher.

European stock markets in early trading

Traders are waiting for the eurozone data, in an hour’s time. But they’re also pondering the prospect of a US interest rate hike in June or July.

Tony Cross of Trustnet Direct explains:

London’s blue chip index is starting the shortened trading week with some limited gains, helped along by the fact that markets appear increasingly confident that if the Federal Reserve do hike rates again next month, the US economy is now looking strong enough to cope with the fallout.

Chinese shares jump, despite mysterious plunge

China’s stock market has enjoyed its best day since February.

The CSI 300 index closed 3.4%, driven by predictions that the market could soon be included in the MSCI Emerging Markets index (a move which could encourage international investors to hold Chinese shares).

But the session was also marked by a curious plunge in the main futures index, which tumbled 10% before immediately jumping back.

No-one seems to know what caused the volatility, which is also making investors worried.

Bloomberg explains that it could be caused by a single large bet that shares are going ot fall.

“Liquidity in the market is really thin at the moment,” Fang Shisheng, Shanghai-based vice general manager at Orient Securities Futures Co., said by phone.

“So the market will very likely see big swings if a big order comes in. The order looks like it’s from a hedger.”

Updated

German retail sales take a dive

A German national flag.

German consumers kept their hands in the pockets last month, fuelling concerns that Europe’s largest economy may be in the doldrums.

Retail sales fell by 0.9% month-on-month in April, dashing expectations of a 0.9% rise following the 1.4% decline in March.

This data is quite volatile, but it does suggest that the German public are being cautious...

The agenda: Eurozone inflation and jobs report

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

There’s a somewhat gloomy feel to the City of London, as traders trudge back to their desks after the bank holiday weekend.

That’s partly due to the blanket of cloud sitting over the capital, mocking anyone who’s taken the half-term holiday off. But it also reflects persistent concerns over the global economy as we head towards the summer.

Today we’ll get a new healthcheck on the eurozone, with the latest inflation and unemployment data. It may not be too pretty.

Economists predict that the consumer prices index inched up to minus 0.1% in May, despite the European Central Bank’s attempts to push up prices. And the jobless rate, for April, may remain pegged at 10.2%; twice as high as in the UK or America.

These figures will be scrutinised ahead of the ECB’s next governing council meeting, on Thursday.

Traders will also be watching the oil price, ahead of an OPEC meeting on Thursday. And then on Friday, we get the next US unemployment report. That will give fresh clues about whether American interest rates could be hiked over the summer.

Here’s the agenda:

  • 8.55am BST: German unemployment report for May
  • 9am: Italian unemployment report for April
  • 10am: Eurozone unemployment report for April
  • 10am: Eurozone flash inflation report for May
  • 1.30pm: Canadian Q1 GDP
  • 3pm: US consumer confidence for May

And we’re not expecting any early fireworks in the markets...

Updated

Sign up to read this article
Read news from 100's of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Why Kris Jenner Is Pretty 'Who Cares' When It Comes To Negative Fan Reactions To Stuff That Happens On The Show
Like water off a momager's back.
Cinemablend
Cinemablend
One Thing Dwayne Johnson Was Extremely Mindful Of With The Moana Live-Action Film (Since The Animated Is 'So Good')
It clearly wasn't that hair.
Cinemablend
Cinemablend
When does Daredevil: Born Again season 2 take place in the MCU – and is it a prequel to Spider-Man: Brand New Day?
A larger look at how Daredevil: Born Again season 2 fits into the MCU timeline
Total Film
Total Film
The Diddy-Related Argument Jay-Z Is Reportedly Making Amid His Defamation Lawsuit
Jay-Z is still dealing with his own legal matter.
Cinemablend
Cinemablend
Latest Avengers: Doomsday Rumor Claims An Epic Battle Between Heroes Is Coming (And I’d So Watch That)
Bring on the Marvel crossovers!
Cinemablend
Cinemablend
‘SNL UK’ Feels Like a Return to the New York Comedy Staple. Can the Flagship Show Take Notes?
There are already some great sketches!
The Mary Sue
The Mary Sue
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.
Download on the AppStore Get it on Google Play