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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Non-Farm Payroll: US economy created 211,000 new jobs in November - as it happened

Today’s jobs report will show whether US workers are receiving higher wages.
Today’s jobs report will show whether US workers are receiving higher wages. Photograph: David Goldman/AP

Bill Gross, former chief of bond giant Pimco who now works at Janus Capital Management, also believes US interest rates will be raised this month.

Speaking to Bloomberg TV earlier, Gross said the Fed is “certainly set to go”.

Janet Yellen and colleagues are concerned about the impact on the real economy if borrowing costs are left at record lows much longer, he added.

US economy adds 211,000 jobs as interest rate hike nears

Over to New York, and my colleague Jana Kasperkevic:

The US economy added 211,000 jobs in November, slightly better than expectations, with the unemployment rate remaining steady at 5%, the US Department of Labor announced on Friday.

Friday’s report is the last before the Federal Reserve meets 15-16 December to determine whether it should raise interest rates. The last time the Fed raised interest rates was June 2006.

Friday’s job report would have had to be a “disaster” for the Fed to delay raising interest rates, said economists. The addition of 211,000 jobs likely paves the way for a rate hike later this month.

Last month, US employers smashed expectations and added 271,000 jobs, the largest number of any month so far this year. Employers have added a robust average of 237,000 jobs a month over the past 12 months. Figures from the payroll company ADP show private sector employers added 217,000 jobs in November – the most for five months.

Economists expected the US economy to add 200,000 jobs in November and the unemployment rate to remain unchanged at 5%, a seven-and-a-half-year low.....

In other news.... the oil price has fallen sharply, on the back of reports that the OPEC group decided not to cut production, at today’s meeting in Vienna.

It’s a complicated picture, though - there are reports that OPEC raised production limits from 30 million barrels per day to 31.5 million.

However, that might just be a technical change to accommodate Indonesia’s return to OPEC.

This means industry watchers are a little perplexed right now:

All may become clear later....

Updated

Bear Watches Goldilocks Eat breakfast --- Image by Royalty-Free/Corbis

Brenda Kelly of London Capital Group, the City firm, says today’s jobs report is just what the markets wanted - neither too hot, nor too cold.

“Judging by the market reaction, specifically 2-year yields,the market is very much expecting that this will only bolster a Fed hike this month.

“I think we got our Goldilocks number.”

[that’s bad news for the bears #boomboom ]

Updated

Paul Ashworth of Capital Economics is confident that US interest rates will, after nine years, be raised this month:

The 211,000 gain in November’s non-farm payrolls, along with the 35,000 upward revision to the gains in the preceding two months, would appear to seal an interest rate hike at the Fed’s upcoming FOMC meeting, which concludes on the 16th December.

Young people are still playing catch-up in the jobs market:

Bloomberg’s chief economist, Carl Riccadonna, believes that Federal Reserve will be very reluctant to raise interest rates a second time.

The US mining industry has had a bad year, as producers are hit by the slump in raw materials prices and lay off staff.

Today’s report says:

Employment in mining continued to decline in November (-11,000), with losses concentrated in support activities for mining (-7,000). Since a recent peak in December 2014, employment in mining has declined by 123,000.

This makes mining a clear outlier:

Updated

There is one wrinkle in the jobs report - the number of people ‘under-employed’ rose a little.

BNP Paribas’s economics team explains:

One downside surprise in the report was that the number of people working part-time involuntarily increased to 6.09 million from 5.77 million, and their share of the labor force also increased, to 3.9% from 3.7% -- likely related to the seasonal retail hiring.

Here’s more reaction to the jobs report:

There was little significant change to the US jobs market last month, according to the Bureau of Labor Statistics.

It says:

In November, the unemployment rate held at 5.0%, and the number of unemployed persons, at 7.9 million, was essentially unchanged.

Over the past 12 months, the unemployment rate and the number of unemployed persons are down by 0.8 percentage point and 1.1 million, respectively.

Among the major worker groups, the unemployment rates for adult men (4.7%), adult women (4.6%), teenagers (15.7%), whites (4.3%), blacks (9.4%), Asians (3.9%), and Hispanics (6.4%) showed little or no change in November.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.1 million in November and has shown little movement since June. In November, these individuals accounted for 25.7 percent of the unemployed.

The full statement is here.

Joseph Lake of the Economist Intelligence Unit points out that the Fed won’t raise rates fast unless wage growth merits it.

And at 2.3%, earnings growth isn’t exactly on fire.

Shares on Wall Street are expected to rally a little when trading begins in 40 minutes.

The Dow Jones index is tipped to rise by around 100 points, or 0.6%.

Traders like this jobs report because it provides more certainty that the Fed is likely to pull the rate-hike lever this month.

Here’s the detail of those revisions to the non-farm payroll, showing more jobs created than expected in September and October.

Updated

The dollar has strengthened against a basket of currencies.

And the yield (or interest rates) on American government debt is jumping.

They both indicate that investors expect a rate hike this month.

Green light for US rate hike

The instant reaction in the markets is that the Federal Reserve has clearance to raise interest rates this month, for the first time in nine (nine!) years.

US wage growth has slowed to 2.3% per year, down from 2.5% in October.

That’s broadly as expected.

The US unemployment rate is unchanged at 5% - which is a seven and a half-year low.

Updated

More good news - the jobs reports for September and October have been revised UPWARDS, to show that an extra 35,000 more people found work.

US Jobs Report Released

Here. We. Go.

The US economy created 211,000 new jobs last month, according to the eagerly awaited Non-Farm Payroll.

That’s slightly more than expected, and may raise the chances that the US Federal Reserve raises interest rates at its meeting on 16 December.

More to follow....

Oh the tension....

Unless today’s jobs report is a real shocker, the Federal Reserve is likely to raise interest rates at this month’s meeting (in 12 days time).

And that’s why today’s report may NOT be the most important non-farm payroll in history.

Laura Rosner, a U.S. economist at BNP Paribas in New York, explains:

“It would have to be a very large surprise — both in November and potentially a downward revision to October — to really change the outlook enough for the Fed to stop and reconsider the hike in December.”

Bloomberg’s Joe Weisenthal (a big fan of Jobs Day), reckons shares will rally if the Non-Farm Payroll hits forecasts.

This is the biggest Jobs Report of 2015, says Conner Campbell of City firm SpreadEx.

Things are set to hot up as the last non-farm payroll of, not only the year, but before December’s potentially decisive FOMC meeting, finally arrives.

Interestingly both the dollar and the Dow are already surging this morning; the former, understandably, is excited at the thought of an impending rate rise whilst the latter has jumped (in pre-market trading) on the hope that the months-long Fed-uncertainty may finally be coming to an end.

Non-farm payroll, a preamble

Right! There are just under 30 minutes until the final major piece of economic news of the week - the US jobs report.

As our preview explains, economist are expecting to hear that around 200,000 new jobs were added to the Non-Farm Payroll in November.

A high number may well give the Federal Reserve the confidence to raise interest rates for the first time since 2006. But a weak reading, or surprisingly poor wage growth, might prove a headache for the Fed.

Financial markets are already reeling from the ECB’s policy meeting yesterday, when predictions of a really big stimulus push proved incorrect. Another shock today could spark some wild trading....

Bloomberg have run a good piece about how Goldman Sachs were caught out by the ECB yesterday.

Here’s a flavour:

Less than 24 hours after predicting that a “dovish surprise” from European Central Bank President Mario Draghi would send the euro tumbling as much as 3%, chief currency strategist Robin Brooks is rethinking his entire weak-euro thesis after the ECB and currency markets moved against him.

The euro rallied 3.1% to $1.0940 by the close of trading Thursday, the most since 2009, after Draghi delivered a stimulus package that was less aggressive than investors anticipated.

“Today was not the most fun day I’ve ever had,” said Brooks, who’s putting his euro forecasts under review. “What’s clear is the meeting sent a very confusing message.”

Mark Carney is now arguing that companies should have a plan to become carbon neutral:

Updated

Mark Carney announces climate change taskforce

Over in Paris, Bank of England governor Mark Carney is announcing a new body to educate companies about the impact of climate change.

It will be headed up by another big hitter - Michael Bloomberg.

Our Economics editor Larry Elliott has the story:

Michael Bloomberg, the former New York City mayor, is to head a new global taskforce aimed at highlighting the financial exposure of companies to the risk of climate change.

Investors, insurers, banks and consumers will be provided with more information under plans for a voluntary industry-led code announced by the Financial Stability Board (FSB), the G20 body that monitors and makes recommendations about the financial system, at the COP21 Paris Climate change conference on Friday.

Carney is telling delegates in at COP21 that firms and investors both need to take climate change, and carbon reduction, seriously:

The collective brilliance (?) of Finance Twitter reckons 211,000 new jobs were created in America last month. That’s around 11,000 more than the market consensus.

We’ll find out who’s right in two hours time (or less wrong, anyway.....)

ECB VP: Don't blame us for market mistakes

The vice-president head of the European Central Bank won’t be receiving many Christmas cards from the City this year.

Vitor Constancio has told CNBC that investors, not the ECB, messed up yesterday.

Constancio, whose role includes saying as little as possible during ECB press conferences, was pretty candid about yesterday’s meeting.

He denied that hawks and doves on the governing council had clashed, and insisted that the ECB’s new measures are significant.

Markets, he argued, simply got their expectations wrong.

They did indeed have higher expectations than were there and that’s why they reacted like they reacted but that was not our intention....

After our meeting in October we said that we would reassess the degree of accommodation so we were talking about a recalibration of our measure. We were not talking about, ever, about a new type of QE2 or something like that. That’s not what we were talking about.”

What to watch for in the US jobs report

There are several important points to look for in the US jobs report, due in under three hours time.

First, the total number of new jobs created in November. Estimates range from an measly 130,000 to a punchy 275,000.

Anything starting with a “2” will indicate that the US labor market is still strengthening.

US non-farm payroll
US non-farm payroll Photograph: Bloomberg TV

Second, the unemployment rate. A further fall below the 5% hit last month might signal further tightening in the market.

Third, the wage growth figures. Economists expect that wages grew by 0.2% during the month, and 2.3% year-on-year. That would be a dip on last month’s 2.5% annual wage growth. Robust earnings would bolster the case for a rate hike.

Non-farm payrolll
Non-farm payroll expectations Photograph: Bloomberg TV

John Kerry visits Athens

US Secretary of State John Kerry visits Athens<br>epa05054025 Greek Prime Minister Alexis Tsipras (L) welcomes US Secretary of State John Kerry (R) during their meeting in Athens, Greece, 04 December 2015. John Kerry is in Athens on one-day working visit. EPA/ORESTIS PANAGIOTOU / POOL

US Secretary of State John Kerry is visiting Athens today, and giving the country’s government a show of support.

Reuters has the story

Speaking at the start of talks with leftist Greek prime minister Alexis Tsipras, Kerry said:

“I appreciate the way in which you have been approaching the economic reform effort and the challenges of the debt.

“It’s not easy, and we want to try to be as helpful as we can to see Greece come out of this”.

Tsipras replied:

“I want to show you that Greece remains a(field) of stability in the region.”

Greek Prime Minister Alexis Tsipras (L) meets with US Secretary of State John Kerry in Athens December 4, 2015. / AFP / POOL / JONATHAN ERNSTJONATHAN ERNST/AFP/Getty Images

Greece is under pressure to keep implementing the terms of its third bailout deal, so that it receives more loans and can negotiate a debt relief deal next year.

City economists are putting the boot into Mario Draghi this morning, after the ECB’s new stimulus package failed to excite the markets:

Goldman Sachs is particularly bruised by events.

Goldman told clients that the euro would tumble towards parity with the US dollar, and must have watched with growing alarm as the single currency soared....

The time-honoured game of guessing how many jobs were created in America last month is underway....

As explained in the introduction, the consensus forecast is that 201,000 new jobs were created last month.

That would probably give the Federal Reserve the green light to raise interest rates this month.

VW car sales slump 20% in the UK

(FILES) This September 29, 2015 file photo shows the logo of German car maker Volkswagen (VW) at Northern Virginia dealer in Woodbridge, Virginia. Volkswagen’s US sales plunged 25 percent in November after it suspended sales of diesel vehicles in the wake of an emissions cheating scandal, the embattled German automaker said December 1, 2015. AFP PHOTO/PAUL J. RICHARDS PAUL J. RICHARDS/AFP/Getty Images

Sales of Volkswagen cars slumped by a fifth last month, suggesting that UK customers may be discouraged from buying VW due to the emissions scandal.

Just 12,958 VW-branded cars were sold in November, down from 16,196 a year earlier. That’s according to new figures from the Society of Motor Manufacturers and Traders.

Other cars from the VW stable also suffered, with Audi sales down 4%, SEAT tumbling by 23%, and Skoda dropping by 10%.

The overall market grew by 3.8% year-on-year.

OPEC meeting underway

Over in Vienna, the Organization of the Petroleum Exporting Countries is beginning its meeting to discuss oil production.

It’s quite a scrum, with reporters desperate to hear any clues about possible production cuts (although this seems unlikely)

With oil price still in the low $40 per barrel range, OPEC members are actually losing money on production right now:

Alexander Pope Portrait -- Painting<br>Head and shoulders portrait of English poet Alexander Pope (1688-1744). Painting by W. Hoare. --- Image by Bettmann/CORBIS
Alexander Pope, monetary policy analyst English poet

Let’s not forget that the European Central Bank DID announce new stimulus measures yesterday - not just as much as investors had expected.

So the negative market reaction may just show that traders got carried away, not that Draghi fumbled the ball.

As Kit Juckes of French bank Société Générale puts it:

Blessed is he who expects nothing, for he shall never be disappointed”. So wrote Alexander Pope just for occasions like this.

If we had expected nothing, we would think the ECB has eased policy, cutting the Deposit Rate to -0.3% and extending the asset-buying programming.

Kit adds that the euro is still 4% weaker than in mid-October, when Draghi hinted that the ECB would ease monetary policy again. That shows that the stimulus has had an effect (even though the euro bounced back so strongly yesterday)

Updated

In other news, pub chain Wetherspoon’s has become the latest UK company to fall victim to hackers:

European stocks right now
European stocks right now Photograph: Bloomberg TV

European markets are sliding lower, down around 0.4% now.

That adds to yesterday’s rout which wiped 3.5% off the French and German markets.

Mike van Dulken of Accendo Markets says investors haven’t got over yesterday’s ECB meeting yet.

Markets continue to digest an underwhelming ECB policy update due to internal committee disagreements on what was required to foster regional growth.

While deposit rates went further into negative territory and the quantitative easing (QE) stimulus programme was extended, there was no QE expansion as markets were expecting to help deliver a boost to Eurozone growth and counter deflationary risks..

German chancellor Merkel visits China<br>30 Oct 2015, Hefei, Anhui Province, China --- German Chancellor Angela Merkel looks on under a German and a Chinese national flag as she visits the German Academy at the University of Hefei in Hefei, China, 30 October 2015. Merkel is on a two-day official visit to China. Photo: Soeren Stache/dpa --- Image by © Soeren Stache/dpa/Corbis

It’s not all gloom this morning. German factory orders have beaten expectations.

Industrial orders across the eurozone’s biggest economy rose by 1.8% month-on-month in October, beating forecasts of a 1.2% rise.

And just as importantly, September’s figures have been revised higher to show a drop of 0.7%, not the 1.7% tumble first estimated.

It suggests the German economy is in better shape than some recent data had suggested - which arguably backs up the ECB’s decision not to launch a stronger stimulus package yesterday.

The shadow of Mario the Grinch is falling over Europe’s stock markets again.

Shares are falling in early trading, with the FTSE 100 dropping by 0.2% or 15 points to 6260.

Spain’s IBEX shed 0.6%, and there are small losses in Germany and France

How Mario Draghi stole Christmas

City AM have dubbed Mario Draghi “The Grinch”, blasting the ECB chief for ruining hopes of a decent Santa Rally in share prices this month.

mariogrinch

Here’s a flavour of their front page story:

Santa’s sack was half-empty,” said Ken Wattret, an economist at BNP Paribas.

“As plenty of children will discover on the morning of the 25th, it’s all about expectations and having built them up, the ECB unfortunately failed to deliver fully.

More here: Mario the Grinch ruins Santa rally: Draghi disappoints investors with ECB rates cut

City AM

When financial crisis veterans gather in a few decades time to chat about the good old days, yesterday’s drama will probably get a mention:

Investors appear to be losing faith in central bankers’ ability to keep asset prices pumped up, after years of monetary stimulus.

Chris Weston of IG fears that traders have also lost faith in ECB chief Mario Draghi, amid speculation that hawkish members of his committee blocked new stimulus:

The European Central Bank (ECB) undoubtedly have lost some credibility, or at least that is the line from most economists who were all calling for a shock and awe type of approach.

One question that was raised is why Mario Draghi didn’t try and water down expectations somewhat in one of his recent speeches throughout November. Did he not expect such strong German opposition? We are left with a market that is now of the belief that we are unlikely to see further easing and one that is fully schooled in understanding positioning and expectations and that when a central bank fails to live up to expectations the reaction can be violent.

Asian markets rocked by ECB disappointment

Stock markets across Asia have fallen sharply today, as investors react to yesterday’s damp squib from the European Central Bank.

Japan’s Nikkei has tumbled 2.1%, and China’s Shanghai market was close behind, following Thursday’s big selloff in Europe.

Asian stock markets

The trigger, of course, was the news that the ECB did not boost its bond buying programme yesterday beyond €60bn/month (although it did extend it by six months).

The small cut to bank deposit rates announced by Mario Draghi also fell short of expectations.

Here’s our latest report from Asia:

Introduction: Non-Farm Payroll Day

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

After the drama and disappointment of ECB Day on Thursday, attention now turns to America.

It’s Non-Farm Payroll time, when we get a crucial indicator of the health of the US labor market, and thus the wider economy.

The NFP will show out how many new jobs were created across the US last month (excluding the agriculture sector, where employment trends are driven by the seasons).

Economists predict that the Payroll increased by 201,000 -- although guesstimates range widely. And that uncertainty means the markets could be volatile when the survey is released at 1.30pm UK time, or 8.30am on the East Coast.

This is the most important data to be released before the US central bank decides whether to raise interest rates when policymakers meet in 12 days time.

As this chart shows, the US unemployment rate has fallen steadily for several years to just 5%, to a point where record low interest rates look unnecessary.

Fed chair Janet Yellen declared yesterday that the labor market was improving, in comments that seem to hint that the long wait for a rate hike is over.

Today’s NFP could seal the deal, or throw new confusion over the issue if it’s weaker than expected.

Also coming up today....

We’ll be tracking the reaction to the European Central Bank’s latest stimulus package, which failed to impress the markets yesterday. Shares have already fallen in Asia, and traders are braced for fresh losses in Europe:

And in Vienna, representatives of the OPEC cartel of oil producers are holding their annual policy meeting.

We’re not expecting them to cut production, though, despite pressure from some members to take action to drive prices up.

Updated

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