Barclays is now expecting just one more US rate rise this year, rather than two, in the wake of the weak jobs data. It is forecasting three rises in 2017.
More reaction to the worse than expected US jobs figures.
We could be in for a tricky few months, said David Morrison of Spread.co:
European equities and US stock index futures were already softer ahead of the release but fell further in the immediate aftermath – while the dollar also lost ground.
Of course, it’s worth remembering that we’ll have another set of updates on payrolls, manufacturing and services, plus a GDP revision, before the Federal Open Markets Committee meets next month. So we could have a tricky few weeks ahead of us which will be even trickier if Fed members sound off about keeping an open mind on a June hike.
Dennis de Jong, managing director of UFX.com, believes a June hike is unlikely now:
The labour market has been a shining beacon compared with other elements of the US economy for the past few months, but no longer. More than 200,000 jobs had been added in five of the previous six months, but today’s figure has come in disappointingly low.
An interest rate hike next month is now looking unlikely as the general economic waters are far from calm. Weak growth at home and overseas is a major concern, as is poor manufacturing output, so Janet Yellen and the Fed are expected to keep the interest rate pause button pressed for a little longer.
200,000 monthly job gains "are simply unsustainable in an economy with a potential economic growth rate of less than 2%" – Capital Economics
— James Pethokoukis (@JimPethokoukis) May 6, 2016
James Smith, economist at ING, says the payrolls report is unlikely to change many minds on the Fed’s rate setting committee about the appropriate timing of the next rise:
Although clearly disappointing, this may be more consistent with a gradual slowdown in employment growth as the economy gradually erodes the remaining slack in the labour market.
As an aggregate, the labour report was probably best described as a fairly neutral and crucially, is unlikely to change too many minds on the FOMC about the timing of the next rate hike.
That said, if we were to start seeing a more rapid, sustained downtrend in employment growth over the next few months, this may provide evidence that weakness emanating from the business investment side of the economy, which tends to lead the economic cycle, is starting to filter through to the more lagging labour market – at the moment though, it is hard for either the Fed or ourselves to make any conclusions based on one month’s data.
Back in the UK, Thomas Cook has responded to the threat of a half-term walkout by its cabin crew over plans to reduce break times.
A spokesperson said:
We would like to reassure our customers that nothing matters more to us than safety. It’s regrettable the union has chosen this path because the crew rest procedure, which includes monitoring all crew rest on all flights, was introduced with the agreement of the union.
It also meets the regulations of industry experts the Civil Aviation Authority and does not compromise on safety. We have offered to meet union representatives and the message we hear directly from our crew is that they’re looking forward to a great summer of flying customers on holiday.
The 160,000 non-farm US jobs created in April was way below the average of 232,000 over the last 12 months.
Professional and business services created 65,000 jobs in April, higher than the 12-month average.
At the other end of the scale, jobs in the mining sector fell by 7,000.
Not everyone was surprised by the non-farm payrolls number apparently:
Courtesy : theguardian.com