The FTSE rose on Friday despite a read on manufacturing which showed a downturn in output had deepened in the UK, while US stocks rose as payrolls data topped estimates.
The S&P Global manufacturing purchasing managers' index (PMI) showed output at a 39-month low of 43.0. Any reading below 50 indicates contraction.
Demand was hit by weaker domestic and export conditions, S&P Global said, citing rising interest rates, the cost-of-living crisis, export losses and concerns about the market outlook.
Meanwhile, purchase prices fell at the quickest pace since January 2016 in August, the data shows.
Manufacturing staffing levels were cut for the eleventh successive month in August. Companies linked lower employment to reduced intakes of new work, falling output volumes and cost control efforts. Excess capacity at factories was also cited by some firms, as backlogs of work contracted to the greatest extent since April 2020.
On Thursday, it was revealed that eurozone inflation remained unchanged month-on-month in August, at 5.3%. European Central Bank president Christine Lagarde hinted at a pause in the rate hike cycle following the release.
The moves came as fresh data showed that US payrolls grew by 187,000 in August, topping estimates.
The number of new jobs added in August was the same as the number of new jobs in July. This shows that the labour market is resilient even with high interest rates and inflation.
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The latest ONS data, published this morning, shows that sentiment among business owners is improving.
The body said that approximately two-thirds (65%) of businesses reported some form of concern for their business for September 2023, the lowest percentage reported since the peak of 76% in November 2022.
This is according to initial results from Wave 90 of the Business Insights and Conditions Survey.
The same release shows that consumer spending is up, partly due to the bank holiday weekend.
Revolut debit card spending rose by 4 percentage points, driven by increases in "Retail", "Entertainment" and "Pubs, restaurants and fast food"; while overall retail footfall increased to 102% of the level of the previous week.
Here's Neil Wilson, chief market analyst at Finalto, on the US jobs data due later on:
The US jobs report is the main focus for today as data this week indicated that there has been a slowing in the labour market and its robustness may be showing signs of cracks. This has helped raise hopes that the Fed might be done with rate hikes, Moreover, the kind of PCE number we had yesterday - +0.2% month-over-month, is the kind of level at which the Fed can probably sit back and wait.
Although core PCE ticked up to 4.2% annually, the 3-month annualised rate is coming down fast to 2.9%. Expectations for the nonfarms today are at roughly +170k jobs, average hourly earnings +0.3% and unemployment steady at 3.5%.
Remember Powell is focused on the labour market now – if it cracks sooner than expected, or with a deeper decline in hiring, then do we maybe see the Fed consider cuts sooner than they have been telling us? It’s possible.
Some concerning headline figures coming out of the UK PMI from S&P Global:
Manufacturing PMI at 39-month low of 43.0
Demand hit by weaker domestic and export conditions
Purchase prices fall at quickest pace since January 2016
Bear in mind that anything below a 50 means contraction.
Coming up today:
UK PMI manufacturing @ 9.30am BST
BRC's economic briefing
US jobs report
US PMI manufacturing
Overnight in the US and Asia
Things were looking up for China after unofficial data showed a rise in manufacturing activity in the country -- something which has been a cause for concern coming out of the pandemic. The Caixin manufacturing purchasing managers’ index was at 51 for August, better than economists expected (any reading above 50 indicates growth).
The S&P 500 had its worst month since February, while the Dow had its worst month since May. The Nasdaq hasn't performed this badly since November of last year.
Data published yesterday showed US jobless claims fell to 228,000 last week, undershooting expectations for 235,000. That sets the scene for today's August jobs report, seen as key to the Fed's decision making in its mission to temper price pressures.
Good morning from London! It was an early start for me, covering Nationwide's house price index.
The top lines from that were that the economic environment doesn't appear to be getting any better for people trying to sell houses.
The long and short of it:
UK house price growth was at its weakest point since July 2009 in August, softening 5.3% from August's peak last year, after a 3.8% pullback in July, according to new data from Nationwide.
Prices fell by 0.8% over the month, after taking account of seasonal effects, the building society said.
This represents annual fall of about £14,600 on a typical home. The average price of a house in the UK is now £259,153.
Watch: Fed could be done hiking for the rest of 2023, expert explains