Jobs
Investors up bets on Federal Reserve interest rate cut after US jobs data – as it happened
Investors increase bets on interest rate cut from US Federal Reserve after jobs data
Investors have increased their bets on the Federal Reserve cutting interest rates this month after jobs data came in roughly in line with expectations.
Futures markets put an 89% chance on the Fed cutting rates by 25 basis points at its next meeting on 18 December after the payrolls data, compared to a 68% chance earlier in the session, Reuters reported.
Adam Hetts, global head of multi-asset at Janus Henderson Investors, said:
A strong November non-farm payrolls at 227,000 included some reversals from October and was further offset by a tick up in the unemployment rate to 4.24%. This big rebound from a distorted October read is actually quite balanced, should relieve some economic concerns, and keep the 18 December rate cut expectations on track.
Zooming out a bit from today, the trend of a slowly slowing labour market continues to sit in the sweet spot as far as rate cuts are concerned.
Samuel Tombs, chief US economist at Pantheon Macroeconomics, said:
November’s labor market data give the FOMC the green light to ease policy again this month.
With the cost of external finance for businesses still high, Indeed’s measure of job openings at a four-year low and catch-up growth in health and education payrolls now fizzling out, we expect monthly growth in payrolls to average about 100K in 2025, steering the FOMC to reduce the funds rate by 25bp at alternate meetings despite the risk of tariff-fuelled inflation.
That’s it from the business live blog this week. You can continue to follow our live coverage from around the world:
In our coverage of the Middle East crisis, thousands flee Homs in central Syria as rebel forces push on
In the US, Donald Trump defends Pete Hegseth as he announces more administration picks
In the UK, a minister declines to endorse Keir Starmer’s claim about civil servants being comfortable with ‘decline’
Thanks for reading, and please do join us next week. JJ
Key events
BAE Systems has signed contracts worth $2.5bn (£2bn) with Sweden and Denmark for new CV90 combat vehicles – with some to go to Ukraine.
Denmark will get 115 vehicles, while Sweden will buy 50. BAE, a member of the FTSE 100, said that the agreement also includes “further vehicles for Ukraine financed by the two governments”.
The vehicles are made in Sweden by BAE’s Hägglunds subsidiary.
Major general Peter Boysen, chief of the Royal Danish Army, said:
The infantry fighting vehicle is an essential component of the heavy brigade we are currently building. The 115 new vehicles will significantly enhance Denmark’s contribution to collective security and international operations. With the 44 existing vehicles, we will have a total of 159 vehicles, providing us with substantial strength – also from an international perspective.
Donald Trump complained constantly during the US presidential election campaign that Joe Biden had driven the economy into the ground, but the latest jobs numbers suggest that it is actually in fairly rude health.
Trump will take control on 20 January once more with questions being asked about whether the Federal Reserve should actually even continue its path of cutting interest rates.
The Fed last month lowered its key lending rate for the second time in this cycle, but there is not much sign that the US economy is in desperate need of support.
Nicholas Hyett, investment manager at Wealth Club, an investment platform, said:
Healthy US job numbers were widely expected, but they still come as a bit of a relief after last month’s shock slump. The overall impression is that the US economy continues to go from strength-to-strength.
The question investors will be asking themselves is, with the US economy booming does the Fed really need to keep cutting interest rates.
The incoming Trump administration is set to do everything it can to spur domestic economic activity, and with tariffs potentially pushing up the cost of imports the combination of surging demand and restricted supply could trigger a resurgence in inflation. With labour markets seemingly doing well enough on their own interest rate cuts look increasingly unnecessary.
Michael Brown, senior research strategist at Pepperstone, a foreign exchange broker, said:
The November US labour market report showed a rebound from the dismal, weather-affected October report, as the overall employment situation remains resilient.
Headline nonfarm payrolls rose by 227k in November, a touch above consensus expectations, but well within the forecast range. At the same time, the prior 2 months of data was revised higher, by a net 56k, taking the 3-month average of job gains to +173k.
Taking a step back, my base case remains that the [Federal Reserve] will still deliver a 25 basis point [0.25 percentage point] cut later this month, continuing to normalise the monetary policy stance, as the labour market also continues to normalise. Naturally, the committee will seek not to over-react to a single data point, particularly when incoming figures remain skewed by a number of one-off factors, though the modest rise in unemployment will embolden some of the committee’s doves for now.
US economy added 227,000 jobs in November
The US economy added 227,000 private-sector jobs in November, above the 200,000 expected by economists.
It was a stronger-than-expected bounceback from the 36,000 jobs added in October, according to the US Bureau of Labor Statistics. That October reading was revised up from the 12,000 initial reading.
The American unemployment rate rose from 4.1% to 4.2%, an increase in line with expectations.
The problem with analysing this month’s non-farm payrolls figures will be working out how much of the upward movement – presuming there is upward movement – is reversion to normal, or whether it is showing genuine economic strength.
Oscar Munoz, chief US macro strategist at TD Securities, an investment bank, said:
We do not think that a surge in November job gains implies a sudden resurgence in hiring, but only the normalization from temporary shocks in the data.
It would be more unbiased to analyse the recent payrolls performance by looking at the October-November data together.
Bob Savage, head of markets strategy and insights at BNY Mellon, an investment bank, said he expected 220,000 were added. The focus will be on revisions and unemployment holding at 4.1%, but also on hourly earnings growth.
That is expected at 0.3%, down from 0.4%. The mix of jobs added and the participation rate – the proportion of working-age adults in work – will be key for the Federal Reserve’s plans to lower interest rates further.
US non-farm payrolls: economists forecast 200,000 jobs added
It has been a fairly quiet day on financial markets, but all financial traders’ eyes will turn to the week’s biggest data release: US non-farm payrolls.
Economists expect a major bounceback in the jobs figures – which show how many private sector jobs were added in the previous month – after a shock decline in October.
That reading, at 12,000, dropped far below consensus expectations. Hurricanes and a big Boeing strike hindered hiring, but even so the figure was a fraction of the 113,000 expectation.
It would be a second big shock if November’s figures were not much better. Economists polled by Reuters expect 200,000 new jobs were added for the month.
Economists at Goldman Sachs, an investment bank, estimate nonfarm payrolls rose by 235k in November, above the consensus. The three-month average of job creation is 104,000 – generally a reasonably healthy rate.
Sarah Butler
Retailers saw a surge in sales on Black Friday week – both in stores and online – raising hopes that festive spending will grow this year.
Sales at established stores rose 19% with strong growth at fashion and homewares stores, according to advisory firm BDO’s high street sales tracker which mainly involves small and medium-sized retailers.
Sales in stores rose more than 14% and online sales were up more than 23% as cash- strapped shoppers sought out bargain presents and treats for themselves during the US-inspired discount event.
Fashion performed strongly – up 18% as cold weather hit after a difficult mild October while homeware sales were up 28% as families prepared for guests.
However, the numbers are flattered by comparison to last year when spending tailed off
after Black Friday week – which fell a week earlier in the calendar. It may not be clear until mid-December whether households have felt secure enough to bump up festive spending after a lacklustre few years.
Recent figures from credit and debit card operator Barclaycard suggests consumers’ confidence in their ability to spend on non-essential items reached its highest level since February in the month to mid November.
However it found supermarket spend decreased 1.8%, as two thirds or cardholders said they were looking for ways to reduce the cost of their weekly shop helped by easing inflation. Spending on travel and holidays was up but spending on clothing down amid the mild October and then stormy start to November which held back trips to the high street.
Steelmaking unions have called for the UK’s two remaining blast furnaces in Scunthorpe to remain open in a meeting with Jingye, the Chinese owner of British Steel.
Community, GMB and Unite, the three main unions representing steel workers, said on Friday that a meeting was “constructive” as they presented a report prepared by consultants Syndex. The report contained a “strong recommendation to operate two blast furnaces at Scunthorpe to facilitate a smooth and low-risk transition” to electric arc furnaces.
They said:
If these talks are to lead to a successful outcome, the UK government must make good on its promises to steelworkers by supporting the huge investments required to successfully transition to greener steelmaking.
The Labour government’s talks with Jingye have proven to be difficult, with sources with knowledge of the situation suggesting that Jingye is driving a hard bargain.
The government is even considering nationalisation as one option – although it is not seen as the preferred route.
At least 11 picks for strategic positions after Trump returns to the White House in January have either achieved billionaire status themselves, have billionaire spouses or are within touching distance of that threshold.
The net result will be the wealthiest administration in US history – worth a total of $340bn at the start of this week, before Trump further boosted its monetary value by trying to appoint at least three more billionaires.
One of Trump’s latest appointments was podcaster and former PayPal chief operating officer David Sacks. Sacks will be “artificial intelligence and crypto tsar”.
Sacks, a venture capitalist and Silicon Valley insider, hosted big spenders at his San Francisco mansion in June to support the Trump campaign, with tickets ranging up to $300,000 a head. The event reportedly raked in more than $12m.
You can read the full story on the wealth of Trump’s cabinet here:
A clutch of bidders have expressed interest in buying Thames Water, after its initial owners essentially said they will walk away with nothing.
However, any buyer – including the newly public Covalis bid – will have to negotiate a complex regulatory and political process in order to take ownership. And workers at the sprawling utility will have their say.
Gary Carter, national officer at GMB, which represents water workers, said:
Any plan to takeover Thames and break it up would be a disaster for consumers and workers. These bids won’t stop the leaks nor pollution – they will only line the pockets of those who want to break it up.
Thames Water needs considered, long-term investment to repair its infrastructure, stop the leaks and provide stability; not the plundering of its assets to make a quick buck.
The government has to stop this vulture auction and take control of Thames in the interest of the public.
Bank of England official calls for lower interest rates
The Bank of England should be cutting interest rates by more, a member of the rate-setting monetary policy committee member has said.
Swati Dhingra, an external member of the committee, said high interest rates had hurt consumption and business investment, and damaged the supply capacity of Britain’s economy, according to Reuters. In an interview on Friday with Bloomberg TV, she said:
That’s why I think we should be easing policy more.
Dhingra said that the UK has limited direct exposure to US tariffs, but added that the indirect exposure may be greater. Tariffs could lead to a return of supply chain disruption that we’ve seen in recent years, she said.
She estimated that the neutral rate – the rate at which monetary policy is neither restrictive nor expansionary, was between 2.5% and 3.5%.
Quiz shares slump by 40% as it warns it could run out of cash
Sarah Butler
Glasgow-based clothing retailer Quiz has said it could run out of cash early next year after a “marked decline” in trade both online and in stores in October and November.
The company’s share price has fallen by 44% to 2.35p. It was only valued at £6.6m on Thursday evening.
The business, which has more than 70 stores in the UK and Ireland as well as concessions in New Look and outlets in the Middle East, said it had appointed
advisers to “consider appropriate options” from both a financing and strategic point of view.
In a statement issued to the stock market, Quiz said that changes in the budget had combined with poor autumn trading to put pressure on its balance sheet.
The company continues to proactively manage its cost base and identify opportunities to improve performance and profits. However, ongoing improvements being made in these areas will be offset by the recent proposed changes to the National Living Wage and Employer’s National Insurance arrangements, resulting in circa £1.7m per annum of
additional costs from April 2025.
Quiz said it was managing its working capital carefully but currently had just £1.2m
of headroom within its £4m borrowing facilities.
Tarak Ramzan, the company’s founder and largest shareholder, has offered to provide a
£1m loan to assist the company but this is subject to approval from Quiz’s other lenders.
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