Closing summary
The main event of the day was the closely watched US non-farm payrolls report for March.
It attracted even greater scrutiny than usual after a shockingly weak report in February.
There were 196,000 jobs added in March, beating expectations of a 180,000 rise. The number for February was revised up to 33,000 from 20,000.
But wage growth slowed to 3.2% from 3.4%, and there was a surprise fall in manufacturing jobs in a potential sign that America’s tough stance on trade is starting to weigh.
In the UK, Halifax reported a 1.6% fall in house prices in March - the month that the UK was supposed to leave the EU. It followed a 6% rise in February, underlining the volatile nature of the monthly index. Annually prices rose 2.6%.
The pound was up earlier in the session but is now down 0.4% against both the euro and the dollar, at €1.1601 and $1.3023 respectively.
Sterling’s loss is the FTSE 100’s gain, with the index now up 36 points or 0.5% at 7,438.
The latest productivity figures from the ONS showed the UK still has a major challenge, with the rise in worker efficiency in 2018 only a quarter of the level seen before the financial crisis a decade ago.
And over in Japan, in an interview given just hours before he was re-arrested on Thursday, Carlos Ghosn vowed to fight on “to the bitter end”.
That’s all for today. Thank you for reading the blog and commenting, and please do join us again on Monday. AM
Wall Street opens higher
US markets are up after the opening bell, boosted by the stronger than expected non-farm payrolls report.
- Dow Jones: +0.3% at 26,465
- S&P 500: +0.2% at 2,886
- Nasdaq: +0.3% at 7,917
Over in Greece, tensions with its eurozone partners eased on Friday as the country took stock of almost €1bn in long-awaited aid.
The nation at the epicentre of Europe’s long-running economic crisis was told the money would be forthcoming at a crucial meeting of eurozone finance ministers meeting in Bucharest this morning.
Hopes had been high in Athens that after months of wrangling over a household insolvency scheme – seen as key to facilitating the recovery of bad bank debt - the disbursement would finally go through. The debt relief is mainly from profits on Greek bonds held by eurozone banks during the crisis.
The spat over measures to protect thousands of borrowers from losing their primary homes had not only delayed the tranche but once again soured the leftist government’s relations with creditors.
As the holder of the biggest bailout in global financial history, Greece has received an estimated €280bn in rescue funds since 2010.
US jobs reaction: March surge provides relief
There is a sense of relief after the headline non-farms number for March was better than expected, following February’s shocker.
James Knightley, chief international economist at ING:
After a poor start to the year, some better news has started to come through including today’s US jobs report. Payrolls growth has been very choppy recently, possibly due to the government shutdown and weather, with January’s 311,000 increase followed by a poor (but upwardly revised) February figure of 33,000. We seem to be back on track with a 196,000 gain for March, above the 177,000 consensus.
Kully Samra, vice president at Charles Schwab:
The outlook for the US economy remains strong relative to slowing global growth. Job numbers today have surpassed expectations and wage growth is on the rise. We continue to believe that wages will gradually increase, even if hiring slows.
However, we have seen a continued slowdown in the first quarter and, as the Fed is now forecasting no rate hikes in 2019, investors should not become complacent to the binary risks of a sharper slowdown in growth, or a flare up of inflation due to the tight labour market.
Here is our full story on the March non-farm payrolls report:
Surprise fall in US manufacturing jobs
The non-farm payrolls report showed manufacturing jobs fell by 6,000 in March, which was a big miss compared with expectations of a 10,000 increase.
Dominic Rushe, business editor for Guardian US writes:
March’s strong figures also contained a surprise dip in manufacturing jobs that may point to trouble ahead.
Donald Trump campaigned on a promise to bring back manufacturing jobs to the US. More than half a million manufacturing jobs have been added since his election.
But the pace of hiring has slowed in recent months as the Trump administration’s trade wars rattled the sector. In February, the sector added 1,000 jobs, the weakest number in over a year. In the 12 months prior to February, manufacturing had added an average of 22,000 jobs a month, according to the labor department.
Updated
US wage growth slows to 3.2%
The headline jobs figure of 196,000 was better than expected but annual wage growth fell unexpectedly to 3.2% in March from 3.4% in February.
The unemployment rate was unchanged at 3.8%, as expected.
The fact there was no major shocker on the headline jobs number is boosting US futures:
Stock futures are higher on solid jobs report https://t.co/KxUdqXC37A pic.twitter.com/GERR2KfTto
— Bloomberg Markets (@markets) April 5, 2019
US creates 196,000 jobs in March
Breaking: US non-farm payrolls are in and the headline number is 196,000.
This is better than the 180,000 expected and a sharp increase on February’s figure of 33,000, which was revised up from 20,000.
With less than 10 minutes to non-farm payrolls, here is what economists polled by Reuters are expecting for the headline figures for March:
- Non-farm payrolls: 180,000
- Unemployment rate: 3.8%
- Average earnings: 3.4%
Norway reduces exposure to emerging markets
Norway’s sovereign wealth fund - the world’s largest – is cutting emerging market bonds from the benchmark index it tracks.
The finance ministry said it will remove government and corporate bonds issued by Chile, the Czech Republic, Hungary, Israel, Malaysia, Mexico, Poland, Russia, South Korea and Thailand.
The ministry said in a statement:
Along with certain adjustments to the country weightings for government bonds, the changes proposed will facilitate lower transaction costs in the management of the Fund.
Norway's $1 trillion sovereign wealth fund is reducing its allocation to emerging markets bonds & currencies. https://t.co/eHyo7ehAm1
— Lisa Abramowicz (@lisaabramowicz1) April 5, 2019
The Co-op has stopped selling single kitchen knives in its supermarkets in response to the increase in knife crime.
Read the full story here:
Markets are failing to get motivated this morning according to Connor Campbell at Spreadex, despite a backdrop of key events:
Given it’s a Brexit-baking, US-China trade talking, non-farm Friday the markets were remarkably muted as the morning went on.
The FTSE, at an effective 6-month high already, had little justification for anything bigger than a 0.1% increase, a move that keeps its above 7400 but only marginally.
Sterling struggled to build on its initial growth, cutting its gains to 0.1% against the dollar while seeing them erased against the euro, as reports of a one-year Article 50 ‘flextension’ offer from Donald Tusk was countered by news that Theresa May has asked the EU for a delay only until 30 June.
A reminder that a Brexit Flextension is not a foregone conclusion:
European commission on flextension. "We saw this notion, this term," Commission spokesman says. "The only game in town is the European council, which will start Wednesday at 6pm."
— Jennifer Rankin (@JenniferMerode) April 5, 2019
John McDonnell, shadow chancellor, has responded to the weak productivity figures:
We have a productivity crisis on our hands and this government is in denial about it.
For all the chancellor’s talk of a ‘productivity agenda’, productivity continues to stagnate and is 18% below its pre-crisis trend.
The next Labour government will tackle low productivity as part of our transformative agenda, establishing a national investment bank and a network of regional development banks to provide the lending and investment this country so desperately needs.
UK productivity in Q4 lags behind pre-crisis trend
UK productivity is still lagging behind the pre-crisis trend more than a decade ago, according to the latest figures from the Office for National Statistics.
Output per hour fell 0.1% in the fourth quarter of 2018, compared with the same period a year ago, and was 18% below its pre-downturn trend.
For 2018 overall, productivity grew by 0.5% compared with 2017.
Richard Heys, deputy chief economist at the ONS, said:
Our latest figures show a continuation of a decade of weak growth, often referred to as the ‘productivity puzzle’, with labour productivity growth lower over the last decade than at any time in the 20th century. It has taken the UK a decade to deliver 2% growth, which historically was achieved in a single year.
This affects both the public and private sectors, although one bright spot is healthcare, with more planned procedures taking place than usual through the winter, improving productivity across public services compared with the previous quarter.
Stephen Hubble, chief analyst at currency firm Centtrip, says we could be in for a few surprises when the US non-farm payrolls report is published this afternoon:
Today’s non-farm payroll and wages data will be watched closely as last time the number missed expectations substantially. Only 20,000 new jobs were added versus the 180,000 forecast, with a “hangover” from the longest-in-history US government shutdown last December and January blamed for the lapse.
If today’s release comes close to the forecast of 190,000 for March, market participants will breathe a sigh of relief. The ADP National Employment Report released on Wednesday, a precursor to NFP, came in much weaker than expected at 129,000 as opposed to the forecast of 170,000. I would think surprises could be in store.
Swedbank chairman quits amid money-laundering scandal
Jasper Jolly reports:
The chairman of Swedbank resigned on Friday morning, bowing to intense pressure after a money laundering scandal was revealed at the Swedish lender.
Swedbank has already fired its chief executive, and has faced questions over when it knew about the alleged money laundering.
The departing chairman, Lars Idermark, said that media scrutiny was affecting his other job as chief executive of Södra, a forestry company, and that he would therefore step down from his non-executive role at Swedbank.
In a statement issued by Swedbank, Idermark said:
I have concluded that the media attention is not compatible with my CEO role at Södra. Therefore, I have decided that the best alternative is to leave the position as Chair of Swedbank with immediate effect.
The latest scandal is linked to the previous money laundering uncovered at Denmark’s Danske Bank. Danske admitted in September that about €200bn (£178bn) of cash flowing through its Estonian branch was money laundered from countries including Russia, the UK and British Virgin Islands.
At least 40bn Swedish crowns (£3.2bn) of suspicious transactions flowed between the Baltic accounts of Swedbank and Danske Bank between 2007 and 2015.
Idermark, who returned for a second stint as chairman of the bank in 2016, also defended his communication over the scandal, saying he was restricted in what he could say by privacy laws.
Carlos Ghosn: I will fight 'to the bitter end'
Hours before Carlos Ghosn was re-arrested in Japan on Thursday, he struck a resilient tone in an interview with French television.
The former chairman of Nissan, who had been out on bail awaiting trial on charges of financial misconduct, said hew would defend himself to “the bitter end”.
He added:
I have doubts over the way the judgment will take place. If there is a fair ruling, I am very confident but if it is not fair, I am worried about what will happen.
Ghosn said that during his previous detention he had been forced to sleep with the lights on was not allowed to see his family. He said:
I wouldn’t wish what I have suffered on my worst enemy.
Read the full story here:
European markets are subdued this morning ahead of the US non-farm payrolls report:
- FTSE 100: +0.2% at 7,414
- Germany’s DAX: -0.1% at 11,981
- France’s CAC: +0.1% at 5,469
- Italy’s FTSE MIB: +0.3% at 21,762
- Spain’s IBEX: +0.1% at 9,539
- Europe’s STOXX 600: +0.1% at 388
Tomer Aboody, director of property lender MT Finance, says the March fall in UK house prices reported by Halifax comes as no surprise given all the Brexit “shenanigans”:
March has been dominated by Brexit so the monthly fall in property prices comes as no surprise. For the past couple of years March was flagged up as the date when we would get Brexit and people have been too busy watching the political shenanigans on television to go out and view houses.
The Brexit saga is such a debacle and until it gets sorted, one way or another, few people are going to do anything. There are fewer enquiries out there and fewer people want to sell. Less stock means values will go down - those selling are those who have to sell and may therefore take a lower price. Those who are brave enough to buy believe nothing is going to change in the future so they are going to take advantage of the uncertainty.
Pound edges higher on Brexit 'flextension'
The pound is up against both the euro and the dollar this morning, supported by expectations that the EU will offer Theresa May a one-year “flexible” extension to Article 50.
The pound is up 0.1% against both the euro and the dollar at €1.1660 and $1.3096 respectively. So not exactly major moves but in positive territory (for now at least).
The orange line in the graphic below shows how varied the monthly Halifax data has been:
Howard Archer, chief economist to EY’s forecasting group, makes the point that the Halifax survey has been erratic:
#Halifax report #UK #house prices fell back 1.6% m/m in March after frankly bizarre reported 6.0% m/m spike in Feb. Index has been erratic and much stronger overall than other measures in recent months. Annual increase up to 3.2% in 3 months to March (2.8% in 3 months to Feb)
— Howard Archer (@HowardArcherUK) April 5, 2019
Halifax: UK house prices fall 1.6% in March
UK house prices fell 1.6% in March according to the mortgage lender Halifax, taking the average price of a home to £233,181.
It was a smaller drop than the 2.4% fall predicted by economists, and - underlining the volatility of the monthly survey - followed a 6% rise in February.
The annual growth in UK house prices slowed to 2.6%* in March from 2.8% in February.
Halifax said London in particular remains the weak spot, reflecting the trend seen in other surveys.
Russell Galley, managing director at Halifax:
The average UK house price is now £233,181 following a 1.6% monthly fall in March. This reduction partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures.
Industry-wide figures show that the number of mortgages being approved remains around 40% below pre- financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.
The more stable measure of annual house price growth rose slightly to 3.2% and is still within our expectation for the year. The need to build up a deposit before getting a mortgage is still a challenge for many looking to buy a property. However, the combined effect of fewer houses for sale and fewer people looking to buy continues to support prices in the long-term.
These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London, meaning that we continue to expect subdued price growth for the time being.
*The figure for annual house price growth was changed to 2.6% from 3.2% after Halifax said it had initially got the figure wrong
Updated
David Madden at CMC Markets, says that the weak non-farm payrolls report for February could be either be a sign of weakness in the US economy or a tightening of the jobs market, which means employers need to offer higher wages to fill vacancies.
It is the wages component of the jobs report that is becoming more crucial, Madden says:
The earnings component of the report has become more important lately as US workers who earn more, are more likely to spend more. Also, a high earnings number could be construed that the labour market is tight, and that employers need to offer higher wages in order to attract staff.
The March report is expected to show annual earnings growth of 3.4% in March, unchanged from February.
Agenda: US non-farm payrolls, Halifax house prices
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
All eyes will be focused on the monthly US non-farm payrolls report, which will provide the latest snapshot of the health of the jobs market and wider economy.
This month’s report for March will be of particular interest, after February’s figures shocked with just 20,000 jobs created compared with the 180,000 forecast by economists.
The huge miss troubled investors and added to concerns about a global slowdown. Forecasters are expecting a much bigger number today, with payrolls expected to come in at 180,000. Another big miss in the figures this afternoon would reignite fears of a downturn.
Jasper Lawler from London Capital Group, says that although today’s report is likely to be “solid”, the underlying picture may be weaker:
A strong headline figure and solid wage growth will give investors a good distraction from economic slowdown fears. However, the fact is that the economy could be slowing, whilst the US labour market remains strong. This is because employment is a lagging indicator.
Today’s economic data:
- 8.30am BST: The UK lender Halifax publishes its house prices report for March
- 9.30am BST: The ONS will publish productivity data for the final quarter of 2018
- 1.30pm BST: US non-farm payrolls report and average earnings for March
We will also be looking at any Brexit-related market moves and all the biggest corporate news of the day.
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