Closing summary: Weakness in the US jobs market
Hurricanes and the enormous strike at Boeing were always going to be temporary factors in the US economy, but there are nevertheless signs of a “slowing trend”, according to economists.
Samuel Tombs, chief US economist at Pantheon Macroeconomics, a consultancy, said the data “bolsters the case” for the Federal Reserve to lower interest rates at both its November and December meetings. After that, it depends on what happens on Tuesday...
Tombs said:
The muted rise in October payrolls is not merely due to strikes and the recent hurricanes.
A further slowing in the trend looks likely given that hiring intentions of small businesses remain depressed, large businesses still face a rise in their borrowing costs as low-rate corporate bonds mature, and job openings in the health and education sector have fallen.
August and September job gains were revised down by 112,000 jobs, and growth in job numbers slowed.
Preston Caldwell, chief US economist at Morningstar, said:
Even setting aside the October data, where the impact of temporary distortions is unknown, today’s jobs report was a bit bearish.
The data does point to an ongoing downtrend in job growth. […] There is nothing in the overall assemblage of labour market data to dissuade the Fed from cutting in next week’s November meeting and to loosen policy further over the next year.
The data overall points to a job market that has shed all of its post-pandemic tightness and excesses, and the data suggests enough downside risk to warrant nipping in the bud with monetary easing.
In other business news today:
The UK gilt market appeared to stablise after yields jumped on Thursday.
HSBC chairman Mark Tucker gave his support to Rachel Reeves’s budget.
The UK manufacturing industry fell into contraction in October as companies paused investments ahead of the budget, according to the closely followed purchasing managers’ index (PMI).
Rating agencies gave their UK budget verdicts. Moody’s said the UK government’s increased borrowing will give an “additional challenge” to the public finances, while S&P Global said the UK government will be “constrained” by its debt load.
UK house price growth slowed in October ahead of Wednesday’s budget, surprising economists who had expected faster increases, according to one of the key measures collected by a lender.
Oil prices rose after reports that Iran is preparing an attack on Israel.
You can continue to follow our live coverage from around the world:
In the UK, the Lib Dems say the budget could create a ‘lost generation’ of farmers
In the US, Kamala Harris and Donald Trump campaign in key swing states in final stretch of race
In the Middle East, Israeli strikes kill 25 in Gaza and 13 in Lebanon
Thank you for following this UK budget week. Please do join us next week as we strap in for the US election, and its fallout on financial markets. JJ
UK budget gains backing from HSBC chairman
The response from the business lobby to the UK budget was fairly negative, but criticism of the Labour government has not been universal.
Chancellor Rachel Reeves has gained the backing of some senior bankers – perhaps cognisant that Labour is likely to be in power for at least five years.
Mark Tucker, chairman of HSBC, said:
This is a budget which lays the foundations for necessary investment within a framework of clear fiscal rules. The overall package strikes a balance between tax, spending and borrowing to finance public services, alongside a focus on delivering economic growth.
Patrick Thomson, JP Morgan’s chief executive of asset management in EMEA, said:
The market reaction compared to the Truss mini-budget has been relatively muted and should count as a success considering the ambition of the Budget. It was helpful that there were few surprises, given that it was so well telegraphed ahead of time.
Having raised taxes for much-needed investment in public infrastructure and services, the market will be waiting to see that the money is spent wisely in actually fixing any underlying problems in the economy to have long term impact. Ultimately, we all want to see how this translates into growth, and so the City will look to the forthcoming Mansion House speech for further detail on the proposed investments.
