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US economy beats forecasts with 253,000 new jobs in April, as jobless rate falls to 3.4% – as it happened

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US jobs report released

Newsflash: more jobs were created across the US economy than expected last month, despite higher interest rates.

The US Non-Farm Payroll rose by 253,000 in April, rather stronger than the 180,000 which economists expected.

Whoa. 253K jobs added in April. More than the 180K expected. And unemployment rate remained 3.4%. Was forecast to rise to 3.6%. Wage growth at 4.4% YOY. https://t.co/sX6qnZch01

— Paul R. La Monica (@LaMonicaBuzz) May 5, 2023

“,”url”:”https://twitter.com/LaMonicaBuzz/status/1654464413733142529″,”id”:”1654464413733142529″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”f65e5561-9d08-44c9-9c71-d8e245e62307″}}”>

Whoa. 253K jobs added in April. More than the 180K expected. And unemployment rate remained 3.4%. Was forecast to rise to 3.6%. Wage growth at 4.4% YOY. https://t.co/sX6qnZch01

— Paul R. La Monica (@LaMonicaBuzz) May 5, 2023

This suggests that the Federal Reserve’s series of increases in interest rates over the last year are not cooling the labor market as much as the Fed would like.

But March’s NFP has been revised down, to show that 165,000 new jobs were created, not the 236,000 first expected.

February’s NFP has also been revised lower, by 78,000, from +326,000 to +248,000.

With these revisions, employment in February and March combined is 149,000 lower than previously reported.

April’s increase is lower than the average monthly gain of 290,000 over the prior six months, point out the Bureau of Labor Statistics, adding that:

In April, employment continued to trend up in professional and business services, health care, leisure and hospitality.

After a lively week, it’s time to wrap up.

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Here’s today’s main stories:

“,”elementId”:”f2560df6-4356-4754-a022-90739b23ee68″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/us-economy-april-jobs-growth-interest-rates”,”text”:”US employers added 253,000 jobs in April showing jobs market remains robust”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”1fd2d151-9195-4515-8c13-25cc34775382″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/us-banking-crisis-risks-becoming-self-fulfilling-prophecy-analysts-say”,”text”:”US banking crisis risks becoming ‘self-fulfilling prophecy’, analysts say”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”cbab55a1-38d5-4e95-af64-81a81bbe07c6″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/hsbc-shareholder-meeting-disrupted-by-climate-crisis-protests”,”text”:”HSBC investors reject plan to split bank in meeting disrupted by climate protest”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”c1b7b8a8-0c48-4a9a-b774-62786e66f0f6″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/ba-owner-raises-profit-forecast-as-travel-demand-rebounds-iag-covid”,”text”:”BA owner raises profit forecast as travel demand rebounds”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”aa657c76-08fc-4d71-a84f-7aa6b1ce1986″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/cbi-appoints-ethics-consultancy-principia-advisory-in-fight-for-survival”,”text”:”CBI appoints ethics consultancy Principia Advisory in fight for survival”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”720909c3-3273-4fb1-bc34-c4593ab3f87b”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/technology/2023/may/05/google-engineer-open-source-technology-ai-openai-chatgpt”,”text”:”Google engineer warns it could lose out to open-source technology in AI race”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”1a3b2189-05ca-42e8-a022-0f898f81f667″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/macquarie-southern-water-owner-australian-finance-giant-posts-record-profits”,”text”:”Banking firm that owns Southern Water posts record profits”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”273148c9-f385-484f-b585-08780598779a”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/media/2023/may/05/like-icarus-now-everyone-is-burnt-how-vice-and-buzzfeed-fell-to-earth”,”text”:”‘Like Icarus – now everyone is burnt’: how Vice and BuzzFeed fell to earth”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”730ec868-97e9-456e-a32a-7c18413f7ce5″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/e-fuels-cars-aviation”,”text”:”E-fuels: how big a niche can they carve out for cars?”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”149d0412-d61e-4c76-8c19-bd0cac13ef77″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/uk-news/2023/may/05/mortgages-for-new-uk-first-time-buyers-up-nearly-200-a-month-on-a-year-ago”,”text”:”Mortgages for new UK first-time buyers up ‘nearly £200 a month’ on a year ago”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”05e05596-a1e9-4c94-9844-b1506480069f”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/shell-looks-to-sell-off-its-stake-in-controversial-cambo-oilfield-stake”,”text”:”Shell looks to sell off its stake in controversial Cambo oilfield “,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”afb7e857-c854-497d-8aa9-8ddcee689a6d”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/uk-news/2023/may/05/facebook-whatsapp-instagram-fraud-scams-tsb-meta”,”text”:”Facebook and WhatsApp owner urged by UK bank to act on fraud as scams soar”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”1d9ef407-a8b9-493d-8c8b-1cabbc000db6″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1683302206000,”blockCreatedOnDisplay”:”01.56 AEST”,”blockLastUpdated”:1683302432000,”blockLastUpdatedDisplay”:”02.00 AEST”,”blockFirstPublished”:1683302432000,”blockFirstPublishedDisplay”:”02.00 AEST”,”blockFirstPublishedDisplayNoTimezone”:”02.00″,”title”:”Closing post”,”contributors”:[],”primaryDateLine”:”Sat 6 May 2023 02.00 AEST”,”secondaryDateLine”:”First published on Fri 5 May 2023 16.53 AEST”},{“id”:”645527b68f0830193ba61a4c”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Back in Birmingham, HSBC has defeated an attempt to split up the bank.

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A majority of investors rejected a plan backed by its largest shareholder at the bank’s annual general meeting, which was heavily disrupted by climate protests (as we covered earlier).

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The bank’s chair, Mark Tucker, announced that a majority of shareholders had backed him and the board in rejecting the proposal to spin off HSBC’s Asian operations, he said at the meeting in Birmingham on Friday.

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Several protesters interrupted the meeting after 12 minutes, beginning an hour of disruption in which Tucker and the chief executive, Noel Quinn, repeatedly stopped speaking until the bank’s security removed the campaigners. Protestors sang reworded versions of Y.M.C.A. by Village People and A Message to You, Rudy by the Specials.

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More here:

“,”elementId”:”521582b6-5c08-46a7-8156-ab961ab7f27b”},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/may/05/hsbc-shareholder-meeting-disrupted-by-climate-crisis-protests”,”text”:”HSBC investors reject plan to split bank in meeting disrupted by climate protest”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”7d5168b7-1cb6-41b7-a593-4aae18e8fea6″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1683302326000,”blockCreatedOnDisplay”:”01.58 AEST”,”blockLastUpdated”:1683302426000,”blockLastUpdatedDisplay”:”02.00 AEST”,”blockFirstPublished”:1683302426000,”blockFirstPublishedDisplay”:”02.00 AEST”,”blockFirstPublishedDisplayNoTimezone”:”02.00″,”title”:”HSBC shareholders reject proposal to split bank”,”contributors”:[{“name”:”Jasper Jolly”,”imageUrl”:”https://i.guim.co.uk/img/uploads/2020/02/24/Jasper_Jolly.jpg?width=300&quality=85&auto=format&fit=max&s=914b0d68deef93f067bc82b1d4a7cff2″,”largeImageUrl”:”https://i.guim.co.uk/img/uploads/2020/02/24/Jasper_Jolly.png?width=300&quality=85&auto=format&fit=max&s=379cc2ade345d9eb794745e2cebc7e1b”}],”primaryDateLine”:”Sat 6 May 2023 02.00 AEST”,”secondaryDateLine”:”First published on Fri 5 May 2023 16.53 AEST”},{“id”:”645510778f0830193ba618c9″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The US stock market is sharply higher in early trading.

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The Dow Jones Industrial Average has jumped by 1.3%, or 453 points, to 33,581 points. Most of the 30 large companies which make up the index are higher, led by Apple which is up 4.5% after beating earnings forecasts last night.

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The broader S&P 500 index is up 1.4%, with bank shares rallying – Zions Bancorporation are up 15%.

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The US jobless rate has fallen to 3.4%, from 3.5% in March.

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The number of unemployed persons was ‘little changed’ in April, at 5.7 million, the Bureau of Labor Statistics reports.

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This unemployment rate has ranged from 3.4% to 3.7% since March 2022, a historically pretty strong level.

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Employment continued to trend up in US professional and business services, health care, leisure and hospitality, and social assistance, the jobs report shows.

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The professional and business services sector added 43,000 new jobs, more than the recent average.

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Professional, scientific, and technical services added 45,000 jobs.

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Employment in health care increased by 40,000 in April,

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Bars and restaurants also added jobs – with employment in leisure and hospitality rising by 31,000 in April. But that’s below the average of 73,000 jobs per month over the prior 6 months, with employment around 400,000 below its pre-pandemic level.

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Social assistance added 25,000 jobs, in line with the average monthly gain of 21,000 over the prior 6 months.

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The financial sector shrugged off the turmoil in the banking sector too. Employment in financial activities increased by 23,000 in April, with gains in insurance carriers and related activities (+15,000) and in real estate (+9,000).

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Newsflash: more jobs were created across the US economy than expected last month, despite higher interest rates.

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The US Non-Farm Payroll rose by 253,000 in April, rather stronger than the 180,000 which economists expected.

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This suggests that the Federal Reserve’s series of increases in interest rates over the last year are not cooling the labor market as much as the Fed would like.

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But March’s NFP has been revised down, to show that 165,000 new jobs were created, not the 236,000 first expected.

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February’s NFP has also been revised lower, by 78,000, from +326,000 to +248,000.

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With these revisions, employment in February and March combined is 149,000 lower than previously reported.

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April’s increase is lower than the average monthly gain of 290,000 over the prior six months, point out the Bureau of Labor Statistics, adding that:

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In April, employment continued to trend up in professional and business services, health care, leisure and hospitality.

n

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Tension is mounting in the markets as investors await the latest US jobs report.

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The Non-Farm Payroll, due in around 20 minutes, is expected to show a slowdown in job creation last month.

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Economists predict that around 180,000 new payrolls were added in April, down from 236,000 in March (although that may be revised today). That would be the smallest monthly increase since late 2020, and a sign that the economy has lost momentum.

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“,”url”:”https://twitter.com/FXstreetUpdate/status/1654422887149842434″,”id”:”1654422887149842434″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”7ca24059-121a-4ee5-92e6-0b931d75fc91″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1683288299000,”blockCreatedOnDisplay”:”22.04 AEST”,”blockLastUpdated”:1683288549000,”blockLastUpdatedDisplay”:”22.09 AEST”,”blockFirstPublished”:1683288500000,”blockFirstPublishedDisplay”:”22.08 AEST”,”blockFirstPublishedDisplayNoTimezone”:”22.08″,”title”:”Markets brace for US jobs report”,”contributors”:[],”primaryDateLine”:”Sat 6 May 2023 02.00 AEST”,”secondaryDateLine”:”First published on Fri 5 May 2023 16.53 AEST”},{“id”:”6454d8108f08b3dab5f984b3″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Over in Birmingham, climate protesters are disrupting HSBC’s annual general meeting.

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Just a few minutes in, one protester told the bank it should be ashamed of its role as an ‘financial arson organisation’.

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Interrupting HSBC chair Mark Tucker’s opening address, the protester said:

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I don’t know how you can sleep at night, knowing that millions of people are going to starve to death because of the investments that this bank is making.

n

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Barclays’ AGM was also disrupted this week, as environmental protesters put pressure on the financial community to stop funding fossil fuel projects:

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Shares in US regional banks are rising in pre-market trading, amid calls for a ban on short-selling to calm the crisis gripping the sector.

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PacWest shares are up 9% in pre-market, a small recovery after tumbling 46% on Thursday, while Western Alliance have gained 12.7% after a 38% tumble and First Horizon, who lost 33% yesterday, are up 7%.

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Today’s rally comes after Reuters reported that US federal and state officials were assessing whether “market manipulation” caused the recent volatility in banking shares.

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The White House vowed to monitor “short-selling pressures on healthy banks”, and the American Bankers Association urged federal regulators to investigate a spate of significant short sales of publicly traded banking equities

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In a letter to U.S. Securities and Exchange Commission Chair Gary Gensler, the ABA said it had also observed “extensive social media engagement” about the health of various banks that was out of step with general industry conditions.

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Short-selling is the practice of borrowing shares, and then selling them, in the hope of buying them back at a cheaper price for a profit.

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Neil Wilson of Markets.com points out that the turmoil has begun at banks who were suffering deposit flight (such as Silicon Valley Bank), but is now spreading to others.

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n

The thinking is that the regulators ban short-selling to buy time to come up with some kind of plan to rebuild the industry.

n

There may need to be a ‘whatever it takes’ line in the sand moment – clearly the US authorities haven’t done that – it may be that a ban on shorting bank shares forms part of that. Remember this bank stress is just on being the wrong side of rates, we’ve not even had a recession or full credit cycle.

n

“,”elementId”:”23cf3f61-714c-40ff-8b8a-b247ef32aa2a”}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1683280126000,”blockCreatedOnDisplay”:”19.48 AEST”,”blockLastUpdated”:1683281774000,”blockLastUpdatedDisplay”:”20.16 AEST”,”blockFirstPublished”:1683280846000,”blockFirstPublishedDisplay”:”20.00 AEST”,”blockFirstPublishedDisplayNoTimezone”:”20.00″,”title”:”US regional bank shares rally in pre-market”,”contributors”:[],”primaryDateLine”:”Sat 6 May 2023 02.00 AEST”,”secondaryDateLine”:”First published on Fri 5 May 2023 16.53 AEST”},{“id”:”6454c0b68f0893b8de1eff96″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Housebuilding in the UK has slowed to its lowest point since the first Covid-19 lockdowns.

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The latest survey of UK construction firms has found that housing activity fell at the fastest rate since May 2020 in April.

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Builders blamed delays to new house building projects, and weaker demand as higher borrowing costs hit the market.

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This will fuel concerns that the UK will miss its target of building 300,000 homes a year.

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But overall, construction activity rose again last month, lifted by rising volumes of commercial work and civil engineering activity.

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This pushed the S&P Global / CIPS UK Construction PMI up to 51.1 in April up from March’s 50.7, showing faster growth [any reading over 50 shows expansion].

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The sector has now expanded for three months running, despite the lag in housebuilding.

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Tim Moore, economics director at S&P Global Market Intelligence, says the construction sector’s recovery is “worryingly lopsided”:

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n

Commercial building work continued to outperform, helped by stabilising domestic economic conditions and a gradual rebound in business confidence. Civil engineering activity was also a driver of construction growth during April, with rising infrastructure work contributing to the best phase of expansion in this segment since the first half of 2022.

n

However, the return to growth for UK construction output appears worryingly lopsided as residential work decreased for the fifth successive month. Extended delays on new housing starts were reported again in April, due to a considerable headwind from elevated mortgage rates and weak demand. While there have been some signs of a recent stabilisation in market conditions, this has yet to feed through to construction activity.

n

In fact, the latest reduction in residential building was the fastest since May 2020.

n

“On a more positive note, the latest survey illustrated a further slowdown in input price inflation across the construction sector. Softer cost pressures partly reflected a sustained improvement in supply chain performance, with lead-times for deliveries of products and materials shortening to the greatest extent since September 2009.”

n

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The owner of British Airways has upgraded its full-year profit expectations thanks to strong demand for holiday travel, as the airline group said it expected to fly almost the same number of passengers this year as it did before the coronavirus pandemic.

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International Airlines Group (IAG) reported a first-quarter profit for the first time since 2019, before the travel industry was plunged into chaos by Covid lockdowns. It made an operating profit of €9m (£7.9m) in the first three months of the year.

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IAG’s share price rose by 3.6% on Friday morning.

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Since the end of most global travel restrictions airlines have been racing to restart routes, with demand for holidays in particular soaring and business travel also recovering, albeit more slowly.

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Here’s the full story:

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World food prices have risen, for the first time in a year, according to the United Nations food agency this morning.

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The Food and Agriculture Organization’s (FAO) food price index, which tracks the most globally traded food commodities, averaged 127.2 points last month against 126.5 for March, the agency said on Friday.

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The index was pushed up by increased prices of sugar and meat, while cereals, dairy and vegetable oil prices continued to drop

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The index is still sharply lower than its record high of March 2022 following Russia’s invasion of Ukraine, although the fall in food commodity prices since didn’t stop consumer food prices soaring in the UK and the eurozone.

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The pound is up over 4% against the US dollar so far this year, and up more than 10% over the past six months, points out Victoria Scholar, head of investment at Interactive Investor:

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n

King Dollar, which outperformed in 2022 thanks to the Federal Reserve’s aggressive stream of rate hikes, is losing its crown as the central bank approaches the peak of its rate hiking cycle, reducing the allure of the world’s reserve currency. Other currencies including the pound have been benefitting from this shift away from the greenback. Since the nadir last September after the mini-budget which sharply punished sterling, the pound has been on a tear.

n

The US dollar is under pressure against the pound, the euro, and the Japanese yen today as investors expect a weak jobs report stateside later today with 180,000 job creations anticipated in April, the lowest monthly gain since December 2019 before the pandemic.

n

Meanwhile the pound remains well supported ahead of the Bank of England’s rate decision next week when the central bank is expected to raise interest rates again to 4.5% having previously lifted the bank rate by 25-basis points in March to fresh 2008 highs.

n

UK inflation remains stubbornly high while inflation rates in Europe and the US ease more quickly, with UK CPI stuck sharply above the 2% target at over 10%.

n

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Last September, the pound hit its alltime low against the US dollar after then-chancellor Kwasi Kwarteng announced unfunded tax cuts in the mini-budget, and promised more were on the way.

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Kwarteng’s successor, Jeremy Hunt, reversed the mini-budget, helping the pound to recover.

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And now, the chancellor’s new economic adviser, Anna Valero, is urging Hunt to look beyond tax cuts to revive Britain’s anemic growth rates.

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Valero says Hunt must significantly widen his new business investment stimulus, in an interview with Bloomberg.

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Bloomberg explains:

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n

Valero, a senior policy fellow at London School of Economics’s Centre for Economic Performance, warned that using tax cuts as a “quick fix” to boost growth wouldn’t work and called for more generous incentives to spur business investment.

n

The remarks underscore the competing demands Hunt faces if he finds money for giveaways ahead of the next general election, which is expected in 2024. He’s facing pressure from the ruling Conservative Party to reduce the tax burden, which is the highest it’s been in decades.

n

“If it was as easy as cutting taxes, then we would’ve seen that during the years that we had particularly low corporate tax,” Valero said in an interview on Bloomberg’s UK Politics Podcast. “The tax environment matters, but there are many other things we need to be doing for improving growth. Within the tax environment, we can be thinking about incentives for investment rather than the headline rate.”

n

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n”,”url”:”https://twitter.com/ZSchneeweiss/status/1654386696820244480″,”id”:”1654386696820244480″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e177cbcb-efd5-4c8d-aeb0-e34a61763006″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1683272851000,”blockCreatedOnDisplay”:”17.47 AEST”,”blockLastUpdated”:1683273152000,”blockLastUpdatedDisplay”:”17.52 AEST”,”blockFirstPublished”:1683273152000,”blockFirstPublishedDisplay”:”17.52 AEST”,”blockFirstPublishedDisplayNoTimezone”:”17.52″,”title”:”UK Chancellor’s new adviser warns against quick fix of tax cuts”,”contributors”:[],”primaryDateLine”:”Sat 6 May 2023 02.00 AEST”,”secondaryDateLine”:”First published on Fri 5 May 2023 16.53 AEST”},{“id”:”6454ab338f0893b8de1efed1″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Ouch. German factories have suffered one of their biggest falls in new orders in decades, giving the pound a lift against the euro.

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German industrial orders fell by 10.7% month-on-month in March, significantly more than the 2.2% fall expected.

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It’s the biggest fall since demand slumped in April 2020 early in the Covid-19 pandemic.

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Orders from overseas tumbled by 13.3%, indicating global demand weakened, while domestic orders decreased by 6.8%.

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Commerzbank chief economist Joerg Kraemer said.

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n

“After three increases in a row, new orders literally collapsed in March, thus resumed their downward trend,”

n

“Increasing risks for the export-oriented German industry come from the global interest rate hikes. In addition, the impetus from working off orders that had been stuck due to a lack of materials is waning.

n

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The pound has risen to a one-month high against the euro, at €1.143.

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

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The pound has climbed to its highest level against the dollar in almost a year, as fears over the health of the global economy and the health of US regional banks grip the markets.

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Sterling hit $1.263 this morning, up half a cent, to the highest level since late May 2022. Quite a recovery since last autumn, when it plumbed record depths around $1.03 after the mini-budget shambles.

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The pound is being supported by encouraging economic data this week, showing a pick-up in UK mortgage applications, service sector growth, and car sales.

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The dollar has weakened despite the Federal Reserve lifting US interest rates to a 16-year high this week, with traders noting that the Fed could soon end its tightening cycle.

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The Bank of England is expected to raise interest rates next Thursday, to 4.5%, with the markets now pricing in one additional hike before the end of the year.

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Today’s US employment report will show if America’s jobs market is cooling. Economists predict 180,000 new jobs were created in April, which would be a slowdown on March’s 236,000.

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Also coming up today

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America’s banking sector remains in turmoil, after shares in several regional lenders fell again yesterday.

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PacWest Bancorp shed 50% by the close of trading last night, with First Horizon losing a third of its value. Western Alliance, which firmly denied a report it was exploring a potential sale, lost almost 40%.

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PacWest had sought to calm markets on Wednesday and said it was in talks with several potential investors after its shares fell by as much as 60%. But the sell-off continued on Thursday and affected other regional banks.

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“We believe the banks are having their GameStop-like moment, where social media is amplifying non-traditional approaches to assessing solvency,” Jaret Seiberg, TD Cowen analyst, wrote in a note, adding:

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n

“This creates a self-fulfilling prophecy that pressures stock prices, which then leads to more questions.”

n

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Another bank, HSBC, will also be in the spotlight today as it holds its annual general meeting. Investors will vote on a resolution calling for a spinoff of HSBC’s Asia business, backed by top shareholder Ping An, but opposed by the bank’s board.

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The agenda

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    n

  • 7am BST: German factory orders for March

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  • 9.30am BST: UK construction PMI for April

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  • 10am BST: Eurozone retail sales for March

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  • 11am BST: HSBC’s AGM

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  • 1.30pm BST: US jobs report for April

  • n

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Key events

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Closing post

After a lively week, it’s time to wrap up.

Here’s today’s main stories:

HSBC shareholders reject proposal to split bank

Jasper Jolly

Jasper Jolly

Back in Birmingham, HSBC has defeated an attempt to split up the bank.

A majority of investors rejected a plan backed by its largest shareholder at the bank’s annual general meeting, which was heavily disrupted by climate protests (as we covered earlier).

The bank’s chair, Mark Tucker, announced that a majority of shareholders had backed him and the board in rejecting the proposal to spin off HSBC’s Asian operations, he said at the meeting in Birmingham on Friday.

Several protesters interrupted the meeting after 12 minutes, beginning an hour of disruption in which Tucker and the chief executive, Noel Quinn, repeatedly stopped speaking until the bank’s security removed the campaigners. Protestors sang reworded versions of Y.M.C.A. by Village People and A Message to You, Rudy by the Specials.

More here:

A volatile week of trading is over in London, with stocks closing higher tonight.

The FTSE 100 index has gained 75 points today, or 1%, to 7778 points, rising back from Thursday night’s one-month low.

Relief that America’s jobs market was stronger than expected last month, and easing fears over the US banking sector, propelled shares higher.

Mining giant Antofagasta led the risers, up 3.5%, followed by Barclays bank (+3.4%), and oil giant BP (+3.3%).

Sandy Villere, portfolio manager at Villere & Co in New Orleans, says US regional bakns are benefiting from a relief rally today, after the dramatic sell-off earlier thls week.

Villere added:

“People anticipate over the weekend you can see something with PacWest or one of these banks that’s really been struggling.

So PacWest are up 73% now, clawing back most of yesterday’s slump, while Western Alliance are up 37%.

$PACW $WAL πŸ‘€ pic.twitter.com/8EooiVmPok

— OptionHQ (@OptionHQ) May 5, 2023

n”,”url”:”https://twitter.com/OptionHQ/status/1654507928844652545″,”id”:”1654507928844652545″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”b0b0a784-c5fc-4480-bfb2-b3099f928f2e”}}”>

The oil price is also rallying, as anxiety over the US banking sector eases

Brent crude, the benchmark, is up almost 4% today at $75.21 per barrel, with US crude up 4% at $71.33.

This still leaves oil on track for a weekly fall, after heavy losses earlier this week.

“Rather than underlying fundamentals, the selling frenzy over the past week has been driven by worries about demand linked to recession risks and the strain in the U.S. banking sector,” said PVM oil market analyst Stephen Brennock.

“The upshot is that there is a big disconnect between oil balances and oil prices.”

Wall Street higher after jobs report and Apple results

The US stock market is sharply higher in early trading.

The Dow Jones Industrial Average has jumped by 1.3%, or 453 points, to 33,581 points. Most of the 30 large companies which make up the index are higher, led by Apple which is up 4.5% after beating earnings forecasts last night.

The broader S&P 500 index is up 1.4%, with bank shares rallying – Zions Bancorporation are up 15%.

On Wall Street, shares in US regional banks are rallying hard, as pressure mounts for curbs on short-selling.

PacWest, which came under heavy pressure this week, have jumped by 43% in early trading, while Western Alliance (which yesterday denied a report it was seeking a buyer) have jumped 29%.

The rally comes amid calls for regulatory oversight of short-selling (where traders borrow stock and sell it, hoping to buy it back cheaper for a profit).

Wachtell, Lipton, Rosen & Katz, a law firm that has represented large companies, yesterday called on U.S. securities regulators to restrict short sales of financial institutions.

Also yesterday, the White House said it was closely monitoring the short-selling pressure on healthy banks.

The yield, or interest rate, on US government debt is jumping on the back of today’s hot jobs report.

It’s pushing up the UK’s borrowing costs too, and those of eurozone governments.

The yield on two-year US Treasury bills has jumped sharply to 3.87%, up from 3.73%, a sign that traders believe further US interest rate rises are more likely.

2-year yields bounce pic.twitter.com/YwbWr611c4

— Joe Weisenthal (@TheStalwart) May 5, 2023

n”,”url”:”https://twitter.com/TheStalwart/status/1654464134170259457″,”id”:”1654464134170259457″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”516f70ff-ce1d-47f6-9c16-f441a5a82402″}}”>

Longer-dated bond prices are also falling, pushing up the yield on 10-year US Treasuries by 9 basis points to 3.44%, from 3.35%.

UK gilts are also showing similar, though less dramatic moves.

The yield on two-year UK debt has risen to 3.77% from 3.7%, with 30-year gilt yields rising to 4.17% from 4.09%.

Today’s latest jobs report was ‘hot’ across the board, says Daniele Antonucci, chief economist & macro strategist at Quintet Private Bank, adding:

Payroll employment, the unemployment rate and hourly earnings all came in stronger than expected.

Of these three numbers, hourly earnings is probably the key one. This is because wages are a key driver of inflation, particularly for many services.

The US dollar has climbed after the economy added more jobs in April than expected.

This has pulled the British pound away from this morning’s 11-month high (of $1,2634), back to $1.259.

#USA job growth beat market estimates at 253,000 #jobs increase. #Dollar jumped since that could signal extended monetary tightening, #commodities should have gone down, but they didnt. Maybe a relieve regarding recession worries

— Marcelo Teixeira (@tx_marcelo) May 5, 2023

n”,”url”:”https://twitter.com/tx_marcelo/status/1654471845385478145″,”id”:”1654471845385478145″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”e2ab25a1-2261-4140-928a-929d75c21efa”}}”>

#USA job growth beat market estimates at 253,000 #jobs increase. #Dollar jumped since that could signal extended monetary tightening, #commodities should have gone down, but they didnt. Maybe a relieve regarding recession worries

— Marcelo Teixeira (@tx_marcelo) May 5, 2023

Harvard professor Jason Furman, a former director of president Biden’s National Economic Council, makes some interesting points on today’s jobs report:

Job growth IS slowing, from a ~325K/month pace to a 225K/month pace.

The unemployment rate is very low, at 3.4%. Lowest ever for Black unemployment.

Wage growth highest in a year, but noisy. pic.twitter.com/NNMadidJH4

— Jason Furman (@jasonfurman) May 5, 2023

n”,”url”:”https://twitter.com/jasonfurman/status/1654469832631525378″,”id”:”1654469832631525378″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”a0715d95-ebd0-4bc1-abcd-f3c12505062e”}}”>

Job growth IS slowing, from a ~325K/month pace to a 225K/month pace.

The unemployment rate is very low, at 3.4%. Lowest ever for Black unemployment.

Wage growth highest in a year, but noisy. pic.twitter.com/NNMadidJH4

— Jason Furman (@jasonfurman) May 5, 2023

Here is wage growth, you can see after a few low months it was the highest in a year–although it is both noisy and affected by composition (e.g., some high-wage sectors appeared to add jobs). is moving towards a place more consistent with the ECI/Atlanta tracker. pic.twitter.com/6q8K701gpz

— Jason Furman (@jasonfurman) May 5, 2023

n”,”url”:”https://twitter.com/jasonfurman/status/1654469834334412800″,”id”:”1654469834334412800″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”132e5b6a-1913-439e-a455-de28d112ca0f”}}”>

Here is wage growth, you can see after a few low months it was the highest in a year–although it is both noisy and affected by composition (e.g., some high-wage sectors appeared to add jobs). is moving towards a place more consistent with the ECI/Atlanta tracker. pic.twitter.com/6q8K701gpz

— Jason Furman (@jasonfurman) May 5, 2023

And here is something truly amazing, the employment-population ratio for prime age workers is 0.3pp above where it was prior to COVID. This reflects a combination of the unemployment rate and the labor force participation rate. pic.twitter.com/0eHMwgQnrP

— Jason Furman (@jasonfurman) May 5, 2023

n”,”url”:”https://twitter.com/jasonfurman/status/1654469835898892294″,”id”:”1654469835898892294″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”bf161b1e-83e6-4133-bc92-172aa356e573″}}”>

And here is something truly amazing, the employment-population ratio for prime age workers is 0.3pp above where it was prior to COVID. This reflects a combination of the unemployment rate and the labor force participation rate. pic.twitter.com/0eHMwgQnrP

— Jason Furman (@jasonfurman) May 5, 2023

This report should not be mistaken for an economy in great shape, cautions Bryce Doty, senior portfolio manager at Sit Investment Associates.

Doty says the jobs data is strong, but adds:

People are going back to work because they have burned through their savings. Companies may finally be able to fill positions that have been open for a long time.

This report should not be mistaken for an economy in great shape given the recent string of poor economic data and looming credit crunch.

And on the 4.4% year-over-year increase in hourly earnings, Doty adds:

If workers typically become about 2% more productive each year and companies increase wages by 4.4%, businesses only need to raise prices by 2.4% to maintain profit margins. We do not see 4.4% wage growth as inflationary.”

Hugh Grieves, fund manager of the Premier Miton US Opportunities Fund, says economists have been confounded (not for the first time) by today’s jobs report:

After 14 months of interest rate increases, the US unemployment rate has fallen to just 3.4%, lower than it was at the start of the hiking cycle (3.6%). Clearly economists need to rethink their forecasts of imminent recession.

“Given that the Federal Reserve hinted this week that it would pause on raising interest rates further, markets are now likely to be in a position to react positively to stronger economic data, rather than see it as an invitation for more aggressive Fed tightening.”

Andrew Hunter, Capital Economic’s deputy chief US economist, predicts that the US central bank will still pause its interest rate hikes, despite April’s stronger-than-expected jobs report.

The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown.

Nevertheless, that stronger-than-expected gain was offset by sharp downward revisions to previous months, and, in any case, we doubt it will have the Fed reconsidering its plans for a pause given the wider evidence that labour market conditions are cooling.

Today’s jobs report shows that America’s labor market is strong, says Odeta Kushi, deputy chief economist at financial services company First American.

There’s no sign of a recession in the report, she argues, even though revisions to February and March’s data means job creation in those months was 149,000 lower than previously reported.

The labor market is strong. Total nonfarm payroll employment rose slid to 3.4%. Labor force participation was flat, while prime-age participation (25-54) ticked up to 83.3%, the highest since 2008. (2/n) pic.twitter.com/dLH55fau7i

— Odeta Kushi (@odetakushi) May 5, 2023

n”,”url”:”https://twitter.com/odetakushi/status/1654466313278955521″,”id”:”1654466313278955521″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”6e3ada57-aaae-4ced-ad1b-323c79bfed36″}}”>

The labor market is strong. Total nonfarm payroll employment rose slid to 3.4%. Labor force participation was flat, while prime-age participation (25-54) ticked up to 83.3%, the highest since 2008. (2/n) pic.twitter.com/dLH55fau7i

— Odeta Kushi (@odetakushi) May 5, 2023

Important to note February and March both were revised down. The trend is still slower hiring, but the slowdown is very gradual. (3/n)

— Odeta Kushi (@odetakushi) May 5, 2023

n”,”url”:”https://twitter.com/odetakushi/status/1654468911516078081″,”id”:”1654468911516078081″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”45168d33-a4e5-4347-8b1c-f6cb66000198″}}”>

Important to note February and March both were revised down. The trend is still slower hiring, but the slowdown is very gradual. (3/n)

— Odeta Kushi (@odetakushi) May 5, 2023

Average hourly earnings for private-sector employees rose 4.4% from a year earlier, up from the March annual pace of 4.3%. (4/n)

— Odeta Kushi (@odetakushi) May 5, 2023

n”,”url”:”https://twitter.com/odetakushi/status/1654468912560369665″,”id”:”1654468912560369665″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”3e1ab8fb-18ed-47c7-bb5c-4fca69c7b359″}}”>

Average hourly earnings for private-sector employees rose 4.4% from a year earlier, up from the March annual pace of 4.3%. (4/n)

— Odeta Kushi (@odetakushi) May 5, 2023

If you're looking for signs of a recession in the labor market data, you won't find it in this report. Soft landing is still on the table. (5/n)

— Odeta Kushi (@odetakushi) May 5, 2023

n”,”url”:”https://twitter.com/odetakushi/status/1654469498726936576″,”id”:”1654469498726936576″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”1259efdb-48d3-4182-8171-229a561dca51″}}”>

If you’re looking for signs of a recession in the labor market data, you won’t find it in this report. Soft landing is still on the table. (5/n)

— Odeta Kushi (@odetakushi) May 5, 2023

Read More

US economy beats forecasts with 253,000 new jobs in April, as jobless rate falls to 3.4% – as it happened Reviewed by RP on May 06, 2023 Rating: 5

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