Closing post
That’s all for another week…
The US economy added 162,000 jobs in August, an uptick after a sluggish summer for the labor market.
The unemployment rate held steady at 4.1%, still down from its most recent peak of 4.5% last November, according to new data from the Bureau of Labor Statistics (BLS). Despite the relative stability of the unemployment rate, the number of new jobs added to the economy has been fluctuating, going from 214,000 in March down to a 21,000 gain in July and then back up in August.
Shares in companies seeking oil off the Falklands Islands have fallen, after Argentina threatened sanctions. Rockhopper shares have closed down 6.4% tonight, with Border & Southern shedding 12.6%.
Global food prices have hit a three-year high.
The governor of the Bank of England has said the rise of populist politicians presents a serious challenge to independent central banks.
As Nigel Farage’s Reform UK gathered for its annual conference in Birmingham, Andrew Bailey said central bankers must be prepared to explain their decisions to the public or risk being attacked as an “unrepresentative elite”.
The car company Volkswagen has approved controversial plans to shed 100,000 jobs in a battle for survival as it faces fierce competition from Chinese rivals.
Updated
After a quiet day’s trading, the London market has closed broadly where it began the session!
The FTSE 100 share index has closed down 0.4 of a point at 10,831 points.
IT services company Computacenter (+45) led the risers, followed by DIY chain Kingfisher (+3.2%)
UK government bonds have had a calm day too – prices have strengthened a little, pushing down the yields on 10 and 30-year gilts.
A summer of hostilities in the Black Sea has proved deadly for seafarers, as Russia and Ukraine attacked each other’s ships and port infrastructure, preventing vital grain exports and prompting concerns that the conflict will push global food prices even higher.
More crew were killed in the Black Sea in July than during the entirety of the war before that month as the conflict has intensified, making the body of water the most dangerous in the world for commercial shipping. This is despite the conflict between the US and Iran, with vessels still being targeted in the strait of Hormuz, Red Sea and Gulf of Aden.
As many as 23 people died in July as a result of attacks on 35 ships in the Black Sea, according to estimates from the Turkish seafarers’ union Türkiye Denizciler Sendikası.
Trump: Fed must cut rates
Donald Trump has urged the US Federal Reserve to cut US interest rates, in a Truth Social post bragging about today’s strong jobs figures.
The president posted:
Great jobs number just announced, breaking all estimates (except mine!) by double and triple - And you haven’t seen anything yet! EMPLOYERS ADDED 162,000 JOB IN AUGUST. Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!
A STRONG COUNTRY MEANS A LOWER INTEREST RATE - IT’S A BETTER CREDIT…Very simple! We should have the LOWEST RATE of any country in the World, like “the old days.” Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE! LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged “the President” has an absolute right to do. IT’S BETTER THAN TARIFFS!
The Fed Board, with its great new leader, must get smart - BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen! President DONALD J. TRUMP
However, the Fed’s ‘great new leader’, Kevin Warsh, is more concerned that inflationary pressures are building, which might prompt him to vote for a rate rise not a cut.
Canada’s jobs market stumbled in August.
While the US added jobs, Canada shed 41,700 positions in August, data showed on Friday. This included a 19,000 drop in employment among young people, aged 15 to 24.
That follows an unusually strong summer hiring, though.
Some stocks have dropped at the start of trading in New York, in the latest sign that good economic news can be bad for markets.
The Dow Jones industrial average responded to the better-than-expected jobs report by dropping 169 points, or 0.3%, to 53,516 points.
The broader S&P 500 index is down almost 0.1%.
Today’s August jobs report “shocked everybody”, says Ken Mahoney, CEO of Mahoney Asset Management, explaining:
The economy added 162,000 jobs, and the unemployment rate held at 4.1%. In a normal world, that is good news. Employers hired. The labor market did not roll over.
Markets, of course, are not living in a normal world. When it comes to interest rates, bad news has been good news and good news has been a problem. A strong payroll number keeps alive the chance the Federal Reserve tightens again. Futures had already been pricing a higher chance of a September rate hike. A 162,000 print — well above the roughly 56,000 economists expected, and far above the 31,000 average monthly gain over the prior year — does not make that debate go away.
US government bond yields have risen, as the strong jobs report reignites bets on early interest rate rises.
The moves aren’t huge, though. The yield, or interest rates on 10-year US treasury bonds is up 3 basis points (0.03 of a percentage point) to 4.792%.
Shorter-dated debt (which is more sensitive to rate expectations) has moved more sharply. Two-year US Treasury yields are up 7 basis points to 4.406%, and Reuters reports they also hit their highest since January 2025.
Here’s Richard Carter, head of fixed interest research at Quilter Cheviot, with some rapid reaction to the US jobs report:
“Today’s US nonfarm payrolls report was an important test of whether July’s surprise decline in employment was the beginning of something more troubling, but with 162,000 jobs added in August, the unemployment rate holding steady at 4.1%, and July’s figure revised up to an increase of 21,000, it seems there was no need to worry.
“The figures should offer some reassurance to Federal Reserve policymakers ahead of the meeting later this month, as a swift return to job growth supports the view that the labour market has managed to remain broadly stable despite the loss of momentum seen in recent months. Key drivers of this uplift were increases in food services and drinking places, as well as in local government education. Meanwhile, the information industry saw a decline.”
The dollar is rallying
Today’s forecast-smashing US jobs report has given the US dollar a lift.
The dollar index (which tracks the greenback against a basket of other currencies), is up 0.4%, gaining against the pound and the euro.
Where the US economy added, or lost, jobs in August
Here are highlights from today’s US labor market report:
Employment in food services and drinking places increased by 59,000 in August.
Local government education added 42,000 jobs in August
Employment in manufacturing continued its upward trend, rising by 16,000
Employment in health care continued to trend up, by 13,000
But…
Information employment declined by 23,000 in August, following losses that had averaged 8,000 per month over the prior 12 months. In August, job losses occurred in computing infrastructure providers, data processing, web hosting, and related services (-8,000), in publishing industries (-7,000), and in broadcasting and content providers (-5,000).
US job report smashes forecasts
Newsflash: Hiring has surged across the US economy.
Employment surged by 162,00 in August, much stronger than the 56,000 new hires expected, the latest non-farm payroll report shows.
The US Bureau of Labor Statistics reports that employment increased in food services and drinking places and in local government education, while the information industry lost jobs.
And in another important development – the US did not shed jobs in July, as first reported.
The BLS reports that there were 44,000 more jobs than it previously estimated in July – meaning employment rose by 21,000, rather than falling by 23,000.
The change in total nonfarm payroll employment for June was revised up by 11,000, from +20,000 to +31,000, too.
This should cheer the Trump White House.
But it might cause some on the Federal Reserve to ponder whether the labor market might be strong enough to handle higher interest rates….
Updated
New economic data from Dublin has shown that Ireland is on the brink of recession, by one measure.
Ireland’s domestic economy fell 0.8% quarter-on-quarter from April to June, Central Statistics Office data shows.
However, Irish GDP surged by 10.2% in the quarter. This is not a robust measure, though, as it’s heavily influenced by multinational companies based in the Republic.
Save the Children aid for 1.5 million in need wiped out by Iran war oil shock
The charity Save the Children has said the oil price shock unleashed by Donald Trump’s war on Iran is forcing it to “spend more to reach fewer children”.
The NGO analysed the increased costs of transport, fuel, food and medical supplies as a result of the Middle East conflict.
It calculated that the extra burden of delivering aid had already been $13m (£10m), which could instead have allowed it to reach an additional 1.5 million children.
Willem Zuidema, Save the Children’s global supply chain director, said:
The conflict in the Middle East is not only putting children at risk in the region but also globally, because every spike in fuel prices drives up the cost of every truck, every shipment, every box of supplies we deliver around the world. We are being forced to spend more to reach fewer children.
Updated
Bank of England governor Andrew Bailey has said that weak productivity and shocks such as Covid-19 were behind a climb in public debt across advanced economies, which in turn was pushing up borrowing costs.
Speaking at the LSE’s Trium conference today, Bailey says:
There are very, very substantial challenges at the moment, structural challenges.
Ageing populations and a desire for higher defence spending were also important factors, he added (Reuters reports), saying:
That is, I think, relevant to thinking about the pressures on bond markets.
Updated
Argentina’s threat to use sanctions against oil producers is a reminder that “sanctions are a foreign policy tool whose legitimacy is in the eye of the beholder”, say John Binns, partner at BCL Solicitors.
This was so even in the days when most sanctions (against al-Qaida, Iraq, Iran etc) drew their authority from the UN. Today, most voters in the US, UK, and Europe see sanctions against Russia as morally justified, insofar as they think about them at all. Their use by the US against the ICC and by the UK against Israeli settlements in Palestine are more controversial. In China, Russia and elsewhere, sanctions are used to counter what those countries see as aggressive actions by the West.
The truth is that the power of sanctions, especially when they are unilateral, depends not on the merits of the cause but on the power of the state imposing them. The UK may well respond to Argentine sanctions with something of a shrug, at least for now.
This is another good line from Andrew Bailey’s speech:
The modern central bank is therefore the product of a long historical process. On one hand lies the Montesquieu tradition, concerned with limiting arbitrary power through institutional checks. On the other lies the tradition of Locke and Hume, concerned with establishing money and credit as public goods upon which society depends.
Bank of England governor: Central banks face challenge from populists
The governor of the Bank of England is delivering a robust defence of central bank independence, which has come under fire from populist forces in recent years.
Andrew Bailey, speaking at the LSE TRIUM anniversary conference in London this morning, is arguing that modern central banks deliver a public good by defending monetary and financial stability.
He insists that central banks exist to protect the value of money from short-term pressures that could damage the public interest, rather than “accumulate or counter arbitrary power”
Bailey says:
Central bank independence does not mean detachment from democracy. It means insulation from short-term political pressures within a democratic framework. Its legitimacy derives from a parliamentary delegation and accountability goes with that independence. It is the basis on which independence legitimately rests.
In a speech littered with historical references (Hamilton! Montesquieu! Locke!), Bailey acknowledges that there is growing scepticism about public institutions – such as central banks – in many countries. This means central banks must explain their decisions clearly, or risk losing their legitimacy.
Bailey explains:
As Jan-Werner Müller has argued, populism often rests on the claim that a particular political movement alone represents the authentic will of the people. Put thus, the public interest is something that a single ideology can capture and deliver directly. This effectively collapses Barry’s distinction between the public interest and the public good.
Any institution seen to get in the way becomes an unrepresentative elite standing between the people and their will, and thus an obstacle to popular sovereignty. This is a serious challenge. We have developed systems of government (in the broadest sense of this term) in which legitimacy rests in the plurality of society, not in the preferences of any single group within it. Courts of law, universities, regulatory bodies and central banks all derive authority through forms of democratic delegation set within a framework of that plural society.
Maintaining the trust that goes with that delegation matters deeply.
You can see the full speech here.
Updated
UK construction output hit by sharp drop in house building
Ouch! The downturn in the UK construction sector has accelerated, as builders cut back on housebuilding.
S&P Global’s UK construction purchasing managers’ index has dropped to 44.3 in August, from 44.7 in July.
That shows that activity in the sector shrank at a faster pace (as 50 points = stagnation).
Housing was the only category to register a faster pace of contraction than in July, S&P Global, a blow to the government’s ambitions to build more houses.
Tim Moore, economics director at S&P Global Market Intelligence, says:
UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August. A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.
Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector. Total new business nonetheless decreased to the least marked extent for 11 months amid reports of support from transport infrastructure work and some pockets of vitality, such as datacentre rollouts and energy sector projects.
Updated
UK mortgage rates start to rise as bond turmoil ripples
Newsflash: UK mortgage rates have started to rise, as the recent turmoil in the bond market hits borrowers.
Data provider Moneyfacts has reported that the average rate on fixed-term mortgages rose this morning.
They report:
The average 2-year fixed residential mortgage rate today is 5.60%. This is up from 5.59% the previous working day.
The average 5-year fixed residential mortgage rate today is 5.64%. This is up from 5.63% the previous working day.
There are currently 7,618 residential mortgage products available. This is up from 7,609 the previous working day.
This increase reflects the rise in UK bond yields earlier this week, which pushed up the ‘swap rates’ which measure the cost of lending.
Although UK bond yields did fall yesterday, and are flat today, this leaves borrowing costs near their highest level in years.
Global food prices jumped as hot and dry weather hits sugar production
World food prices have hit their highest level in almost four years, as the summer heatwave hit agriculture production.
The UN Food and Agriculture’s Food Price Index, which tracks a basket of food commodities around the world, rose by 1.9% in August compared with July.
All commodity groups recorded higher price indices than in the previous month, the FAO says, pushing the index to its highest level since November 2022.
Sugar prices surged by 11.9% in the month – a really large jump – partly due to unfavourable weather.
The FAO explains:
Persistent hot and dry weather led to a downward revision of sugarbeet yield forecasts in the European Union, where planted area was already anticipated to decline from the previous season, while El Niño-related weather conditions continued to affect production prospects in key producing countries in Asia.
Cereal rose by 2.2%, due to “robust demand, weather-related concerns over crop prospects in key producing regions, and continued uncertainty surrounding Black Sea export flows”.
Vegetable oil prices were up 0.6% in the month, driven by higher world palm and soy oil prices. The FAO points to “robust global import demand and concerns over the potential impact of El Niño-related weather conditions on production prospects in Southeast Asia”.
Meat prices rose 1%, due to higher poultry, pig and ovine meat prices.
Dairy prices were up 2.3%. The FAC points out that “In the European Union, tightening milk supplies, compounded by hot and dry weather in several major producing regions, supported prices, while sustained import demand added upward pressure”.
Updated
It’s official, UK car sales jumped last month.
New car registrations rose by 13.7% to 94,236 units in August, the Society of Motor Manufacturers and Traders has reported.
That, they say, is the “best August since the introduction of the biannual plate change”.
August is usually a low-volume month for car sales, as some buyers hang on until September to get a new number plate to show off (which has always slightly baffled me).
Electric-powered cars drove sales up in August, the SMMT explains:
Plug-in hybrid electric vehicles (PHEVs) posted the strongest growth, up 39.8% to account for 14.5% of registrations, while hybrid electric vehicles (HEVs) rose 26.3% with 12.7% of the market. Battery electric vehicles (BEVs) increased 27.7% to claim 29.8% of overall uptake.
Shares in Israel’s Navitas Petroleum, which is also involved in the Sea Lion project, have dropped by 4.5% on the Tel Aviv stock market.
Navitas and Rockhopper are partners in the Sea Lion oil drilling project near the Falkland Islands.
Borders & Southern shares slide 15%
Rockhopper are not alone in feeling the impact from Javier Milei’s speech.
Shares in Borders & Southern, an oil and gas exploration company which operates around the Falkland Islands, are down 15% in early trading.
Rockhopper shares plunge as Argentina threatens Falklands oil sanctions
The value of UK-based oil and gas exploration and production company Rockhopper Exploration plunged by 10% at the start of trading in London, after Argentina’s president threatened to sanction oil firms operating near the Falklands Islands.
Rockhopper has drilling interests in the Falklands, having discovered significant oil reserves in the Sea Lion prospect to the north of the islands back in 2010.
But those interests have come under threat, with Javier Milei claiming overnight that the Sea Lion oilfield was a “clear and present danger”.
Milei claimed that the ‘winds of change’ support Argentina’s claim to the Falkland Islands, telling a national TV address:
“Argentina will not stand idly by.
Any further advance on the Malvinas Islands will be considered a violation of our national security.”
The Sea Lion oil project is about 220 kilometers (140 miles) north of the Falklands, and Rockhopper Exploration and Israel’s Navitas Petroleum plan to begin drilling in the coming months and start pumping oil in 2028.
Shares in Rockhopper (named after the penguin which is native to the Falkland Islands) are currently down 9% at 71.1p, having hit a two-month low at the start of trading.
VW shares jump after massive job cuts agreed
Shares in Volkswagen have jumped by 7% in early trade in Frankfurt, Reuters reports, after the company agreed the biggest restructuring in its history.
That confirms that investors had not expected VW’s supervisory board to back the plan, and had feared conflict between management and unions.
Deutsche Bank: This is a 'fundamental breakthrough' by VW
Investors will cheer Volkswagen’s supervisory board’s decision to back its sweeping restructuring plan, argues Deutsche Bank analysts.
They told clients this morning:
The unanimous approval of Volkswagen’s Zukunftsplan 2030 last night is, in our view, a fundamental breakthrough and a much-better-than-feared outcome. We expect the market to react positively.
Virtually every single one of the numerous investors we spoke to over the last few days continued to view Volkswagen as simply “not fixable”, and scepticism around the likelihood of a comprehensive agreement remained extremely high.
Citi: This is a brave plan from VW
Financial analysts are applauding Volkswagen for reaching agreement on its 50,000 job cuts.
Citi have congratulated VW management, the VW workers council and the representatives from the State of Lower Saxony for appoving the company’s Future Plan 2030.
They say:
This is a brave plan and a realistic decision for all concerned. As we have highlighted, given VW’s German plant competitiveness and lack of global revenue opportunities, VW simply had no other choice. The plan will allow VW to cut costs, to cut the number of models (and complexity), and to sharply cut investment spend by a further €6bn p.a. (per year)
This decision should further allow VW to continue to move capital to its highest-return brands and models, without the need to maintain excess capacity utilisation. Whilst VW’s LT EBIT targets remain ambitious, VW has once again proved its progress in recent years.
Volkswagen to slash another 50,000 jobs
Elsewhere in the car sector, Volkswagen’s supervisory board has agreed to back a sweeping overhaul that will cut another 50,000 jobs and could lead to plant closures.
VW announced last night that “after intense and constructive discussions”, the Supervisory Board has unanimously approved the comprehensive Future Plan 2030 drawn up by chief executive Oliver Blume.
Blume says:
“The Supervisory Board has unanimously approved the Executive Board’s Future Plan presented today. This is a strong signal for the future of the Volkswagen Group. We are taking responsibility for our entire workforce, for our partners and for industrial jobs worldwide. Over the coming years, we will invest a three-figure billion sum to make our iconic brands even more attractive, stronger and more competitive.”
The VW Supervisory Board includes employee and shareholder representatives, and it wasn’t clear that they would approve Blume’s plans.
These cuts are on top of 50,000 already agreed, as VW battles with competition from China, weak sales in Europe, and automobile tariffs set by Donald Trump.
Updated
UK car sales log strongest August since 2018
Registrations of new cars in the UK rose about 13% to more than 90,000 in August, preliminary industry data showed on Friday.
If confirmed at 9am, when the final data is issued, that would be the highest number for an August in eight years.
The latest data from the Society of Motor Manufacturers and Traders is also expected to show that the market share of battery electric vehicles rose to about 30% in August.
Yesterday, data from New AutoMotive showed a 17.5% jump in overall new car registrations in August.
Introduction: Data splurge ahead, and a Bailey speech
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
After a week of bond market jitters, today we’re going to get some fresh insight into central bankers’ thinking, and the health of the UK and US economies.
Bank of England governor Andrew Bailey is due to speak in London this morning – a day after his chief economist called for higher UK interest rates. Will Bailey – among the majority who voted to leave rates on hold in July –push back?
Opponents of rate rises point out they hurt growth, and won’t tackle the oil supply shock caused by the Iran war.
This morning, a survey of UK builders will show how they’re coping, while the UN’s latest food price index will show if stables such as dairy, cereals, sugar, and meat are getting even pricier.
Then this afternoon, the Non-Farm Payroll will show how many jobs America added last month. Back in July, the NFP showed a shock fall in employment – economists expect a rebound in August, with forecasts for around 56,000 new jobs.
The agenda
9am BST: UN’s FAO Food Price Index
9am BST: SMMT car sales
9.30am BST: UK construction PMI
9.30am BST: Bank of England’s Monthly Decision Maker Panel data - August 2026
9.30am BST: ONS Economic activity and social change in the UK, real-time indicators
9.50am BST: Andrew Bailey gives keynote speech at LSE TRIUM Anniversary Conference, London
1.30pm BST: US non-farm payrolls jobs report
Updated
