The FTSE 100 closed in the red on Friday as the US non-farm payrolls report came in worse than anticipated.
US employers added 151,000 jobs, compared with consensus expectations for a 190,000 gain and a downwardly-revised 262,000 the previous month, the Labor Department’s non-farm payrolls data showed.
The unemployment rate fell to 4.9% from 5% in December, nearing an eight-year low. Economists had expected the rate to remain unchanged at 5%. Average hourly earnings rose 2.5% year-on-year in January, beating forecasts for a 2.2% increase.
However confident Janet Yellen and her Fed colleagues were when raising interest rates in December, the US data released in January must be raising concerns – and today’s poor non-farm payroll figures are no different
Adding less than 200,000 jobs for the first time since October, coupled with lower than expected GDP and productivity figures, has taken some of the shine off of the previously buoyant US economy.
Meanwhile, the US trade deficit expanded in December to a seasonally adjusted $43.36bn from the previous month’s $42.23bn as exports fell 0.3% and imports increased 0.3%. Analysts had expected a deficit of $43.20bn.
Elsewhere, German factory orders fell 0.7% in December compared to a month earlier, which was a steeper decline than the 0.5% expected by economists.
Much weaker than expected German factory orders clearly highlight that slowing global growth especially in China but also increasingly in the US is starting to impact Europe’s largest economy in a negative way.
In mainland China, the markets were relatively quiet as Chinese went from the trading floors to massive queues outside train stations for the week-long Lunar New Year holiday.
The week is the busiest for travel in the populous nation, as Chinese travel back to their home towns.
Adding to the negative sentiment, oil prices reversed early gains with Brent falling 0.43% to $34.31 per barrel.