Bank of England's Haldane blasts 'Chicken Licken' pessimism; US payroll growth swells – as it happened

Time for a quick recap.

The Bank of England’s top economist has warned that pessimism about the UK recovery could hurt growth.

Andy Haldane hit out at ‘Chicken Licken’ pessimism, arguing that Covid-19 restrictions, rising unemployment and Brexit were all less serious threats than doomsters suggest.

Haldane declared:

If the economy were sat on a psychiatrist’s sofa, the diagnosis would not be especially difficult. A propensity to dismiss good news and dwell on bad? To catastrophize about the future? The sense of events being beyond our control? These are the psychological symptoms of anxiety. And collective anxiety is as contagious, and could be as damaging to our well-being, as this terrible disease.

Averting an economic anxiety attack calls for a balanced and flexible approach to the words and actions of businesses and policymakers. Planning for the worst is important, but needs to be accompanied by hope for the best. Encouraging news about the present needs not to be drowned out by fears for the future. Now is not the time for the economics of Chicken Licken.

Haldane also argued against cutting UK interest rate below zero, arguing that negative interest rates can’t currently be justified.

But...a swathe of job cuts show that the economy is still bruised from the pandemic. Royal Dutch Shell is slashing up to 9,000 positions over the next couple of years, as it tries to cut costs and move towards low-carbon energy sources.

UK bank TSB is cutting around 900 jobs, as part of a branch closure plan.

It’s also been a busy day for takeover news, with American gambling firm swooping on William Hill....and Canadian security group GardaWorld launching a hostile bid for rival G4S.

On the economic front, more jobs were created in America this month than expected. Private payrolls rose by almost 750,ooo in September, according to ADP.

UK house prices have also hit a new high, rising by 5% in the last 12 months.

Stocks have risen on Wall Street, as investors are cheered by the rise in US payrolls. London’s stock market has turned positive too, with the FTSE 100 now up 14 points or 0.2%.

Growth in the Chicago region has also accelerated faster than expected, according to the latest survey of purchasing managers in the region:

Wall Street has confounded expectations of a post-debate selloff.

Stocks have risen as the start of trading in New York, following the stronger-than-expected ADP payroll report.

There may also be some relief that the US economy contracted very slightly less than first feared in the April-June quarter (by an annual rate of -31.4%, not -31.7%)

The Dow Jones industrial average has jumped by 213 points, or 0.8%, to 27,666 points, while the tech-focused Nasdaq is up a more muted 0.3%, or 34 points, to 11,119.

Investors are also digesting last night’s clash between Donald Trump and Joe Biden (or possibly try to erase the horror from their memories).

Chris Beauchamp of IG says the early polling suggests Joe Biden may have come out of the clash best:

“With less than five-weeks left until the election, we are seeing a president that increasingly speaks of voter fraud which appears to show a candidate laying the groundwork for defeat.

“From a market perspective, while Biden is likely to be more than willing to spend freely in a bid to reduce inequalities, there is also a worry that he will be significantly less business and investor friendly.

Reuters is reporting that Marathon Petroleum Corp, the largest U.S. oil refiner, began cutting jobs on Tuesday across the company.

This follows a slump in demand for motor fuels during the pandemic, and adds to today’s job loss tally (which undermine the positive news on the ADP payroll report).

Andrew Hunter of Capital Economics is cautious about reading too much into today’s ADP jobs report:

The 749,000 rise in the ADP measure of private employment in September supports our forecast that the official non-farm payrolls figures, due on Friday, will show an 800,000 gain. But, in truth, the ADP figures have been a particularly poor guide to the BLS data in recent months.

The ADP data suggest that employment growth actually strengthened this month, with the reported gain in September much stronger than the 481,000 rise in August. But the latter was well short of the 1.4m rise in the official BLS figures, so we are wary of reading too much into that apparent improvement. Otherwise, the details of the ADP report were a mixed bag, with a further slowdown in the pace of recovery in the leisure & hospitality and professional & business services sectors offset by a much stronger gain in manufacturing and construction payrolls.

Snap reaction to the ADP jobs report:

Here’s where the US economy added jobs this month, according to ADP’s new payroll report:

• Trade, Transportation & Utilities: 186,000 net new hires
• Information: 17,000
• Financial Activities: 29,000
• Professional & Business: 78,000
• Education & Health: 90,000
• Leisure & Hospitality: 92,000
• Other Services: 60,000

And in production:

• Natural Resources & Mining: 7,000
• Construction: 60,000
• Manufacturing: 130,000

Newsflash: US companies created nearly three quarters of a million jobs this month, as the labor market recovery continued.

That’s according to ADP, the payroll operator. It reports that private sector employment in America rose by 749,000 during September, up from an 481,000 in August.

Employment gains were made across the US economy, ADP say.

Small firms took on 192,000 more employees, while mid-sized firms (from 50 to 499 workers) hired 259,000. Large employers recruited 297,000 more staff.

ADP also reports that service sector companies hired 552,000 more workers, while goods producers added 196,000 to their payrolls.

That’s a stronger reading than expected - economists had forecast around 600,000 new jobs this month. August’s figure has been revised up too, from 428,000.

This may be a sign that Friday’s non-farm payroll - the US government’s official jobs report - will be solid.

Although, ADP and the NFP haven’t been closely correlated recently, so we’ll find out in 48 hours.....

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Economic anxiety has pushed the oil price down to a two-week low today.

Brent crude has dropped by 1.6% to $40.40 per barrel, heading towards the three-month lows recorded in mid-September.

Fears about weak demand are weighing on crude prices - a reminder of why Shell is making such deep job cuts.

Adam Vettese, analyst at multi-asset investment platform eToro, says:

“Even before this crisis, conditions were incredibly tough for the big exploration firms, due to incessantly low oil prices. This pandemic has just magnified their problems.

“The issue they have now – and it is a major one – is that the demand for their product is still desperately low. While there is more traffic on the roads now than there was a few months ago, the airline industry, a key market for oil producers, is still virtually grounded.

“Most major airlines are now predicting that it will be at least two to three years before passenger numbers reach their pre-Covid-19 levels, which will have a negative knock-on effect for oil demand and therefore British oil producers such as Shell and BP.”

In another takeover development... Italian confectionery giant Ferrero Group is plotting a £250m takeover of Fox’s Biscuits, according to Sky News.

They say:

Ferrero, the family-controlled dynasty behind Kinder chocolate and Nutella, is working with advisers on a bid for Fox’s.

The biscuit-maker’s current owner, 2 Sisters Food Group (2SFG), has asked for offers to be submitted this week, according to insiders.

Other bidders are expected to include Burton’s Biscuits, which owns Jammie Dodgers, and Biscuit International, a European manufacturer of private-label products.