US Jobs Growth Flops

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  • March 11, 2019
real wages

Global markets were dealt a blow last week as the US reported a weak non-farm payroll figure for February. The headline figure fell from an upwardly revised 311,000 in January to only 20,000 in February, significantly undershooting market expectations of 180,000. While it is not uncommon to have volatile monthly data, the low reading will increase concerns of a US slowdown or even a recession. The return of Federal workers following the government shutdown has made the February data potentially unreflective of the underlying economy and economists will be keen to see data over the next couple of months to confirm a change in the trend. Nevertheless, for the time being, it is encouraging that the unemployment rate remains at historically low levels with the participation rate and wages continuing to rise.

Greek Government Bond Issue

Greece is returning to the debt markets following years of absence. The country has finally turned around its economy after many years of punishing bailouts and is now expected to run fiscal surpluses to pay down the mountainous debt pile. Issuing bonds on the public markets will test investor appetite; however, the rally in the government’s debt and the low yields available in the Eurozone would suggest that they will have no problem filling their requirements. Still, the debt-to-GDP ratio of Greece is one of the highest in the world, and it will take several decades of reforms and austerity to return the country to a comfortable level of debt.

UK Promised Government Spending Boost

Under the spectre of the Parliament Brexit votes this week (which may or may not happen) the Chancellor, Philip Hammond, has promised a boost to government spending if the Prime Minister’s deal is passed. The so-called Brexit dividend would be directed to struggling public services and less prosperous areas of the country. However, with emergency funding also set aside for a no-deal Brexit, it appears that increased Government spending is on the cards regardless of the outcome. The recently released public finance figures show that there is scope for spending to be increased and with the Spring Statement scheduled this week, the Chancellor is due to reveal what his intentions are. While a fiscal boost should provide a stimulus at a time when support from the global economy is waning, any resolution to the political uncertainty is likely to provide the biggest improvement to sentiment.

Market Data

Index Open Close Change % Change
FTSE 100 7106 7104 -2 -0.03%
S&P 500 2803 2743 -60 -2.14%
Dax 11601 11457 -144 -1.24%
Cac 40 5265 5231 -34 -0.65%
Nikkei 225 21602 21025 -577 -2.67%
UK 10 Year Gilt Yield 1.29 1.19 -0.1 -7.75%

Posted By Will Dickson

Chief Investment Officer Will Dickson is a Chartered Wealth Manager as part of the Chartered Institute of Securities and Investment (CISI) qualification scheme. This recognition was obtained following an MSc in Finance and Investment from the University of Exeter, and an Accounting and Finance BSc from the University of Bath. Will’s exceptional talent is recognised by CityWire’s Wealth Manager, having been named as one of the UK’s Top 30 investment managers under the age of thirty for the last three years. Will manages and oversees P1’s range of investment portfolios. Working with the Investment Team, Will shapes the investment policy and fund selection for our Passive, Hybrid and Ethical and Sustainable portfolios. In conjunction with managing the fund portfolios, he oversees and our AIM Inheritance Tax and Tier 1 Investment Visa equity portfolios. Will has joint written articles with P1’s Head of Research, Dr Rayer. Their article “Hypothesis: Risk, like Mass and Energy, can neither be created nor destroyed” featured in the CISI’s The Review of Financial Markets. In addition to contributing to articles with Dr Rayer, Will often delivers P1 CISI Endorsed lectures to Independent Financial Advisers. You can see Will’s take on weekly investment news here.