Over to Dominic Rushe, our Wall Street correspondent, for his take on the non-farm payroll:

US adds just 142,000 jobs in August to end streak of bigger gains

The US added 142,000 jobs in August, the Labour Department announced on Friday, the lowest figure this year and one that ends a streak of months in which the economy added over 200,000 new positions.

The news came as a surprise. Analysts polled by Reuters had expected a gain of about 225,000. They correctly anticipated that the unemployment rate would fall to 6.1%, down from 6.2% and close to a six-year low. The US had added an average of 212,000 jobs each month over the prior 12 months.

August’s growth also did little to impact those worst hit by the recession. The unemployment rate for African Americans remained unchanged at 11.4%, more than twice the rate for white people, and Hispanic unemployment stayed flat at 7.5%. Teenage unemployment remained at 19.6%.

The labour-force participation rate — which measures the percentage of the US population who are either working or looking for work — fell to 62.8% in August from July’s 62.9%. The August rate matches the lowest level since the late 1970s and suggests many people may have given up looking for work....

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The downbeat non-farm payroll has put something of a dampener on the stock markets.

In London, the FTSE 100 is down 28 point, or 0.4%, in late trading, and the Dow Jones industrial average is down 0.1%.

Alastair McCaig, IG market analyst, says NFP cast a shadow over prospects for the next week despite further news of a possible ceasefire in Ukraine. Markets also suffered a hangover after surging yesterday as the ECB announced fresh stimulus measures:

The post-ECB slump was intensified by the 142K print on non-farms, taking the shine off the US economic recovery.

Jason Durman, the chairman of President Obama’s Council of Economic Advisers, has defended the US government’s track record on employment.

Speaking on Bloomberg TV, Durman said that today’s data “extends the longest private sector job creation run in history”, with 10 million new jobs added so far.

He adds:

There’s more we need to do, there’s more the President wants to do, but let’s not get too excited or unexcited over any particular month.

And Durman also conceded that inequality of wages is the biggest challenge facing America (and Europe, for that matter), and has been a problem for decades.

He added:

I absolutely agree it’s our biggest economic challenge.

He’s also blogged about the data here:

Over in Greece, reports have begun to emerge that the International Monetary Fund will soon hold an emergency conference in Washington to deal exclusively with the country’s debt problem.

We haven’t, yet, been able to get a response from the IMF.

Our correspondent Helena Smith reports from Athens:

The IMF has decided, once and for all, to deal with the ever-vexing question of debt relief for Greece. Or, so says Michael Ignatiou, the normally well-informed Washington based IMF watcher for Greek daily Ethnos.

The paper, citing “a source well briefed on the issue,” says the debt problem – only worsening by the day – will be addressed by the organization in a conference dedicated solely to the Greek economy in mid-November.

Ignatiou wrote:

“According to the source, the conference is being described as extremely important.”

“At the high-level November meeting all the issues that concern Greece will be discussed but it is expected that lenders will focus on the debt issue, which as all know is not sustainable.”

At the onset of the Eurozone crisis, Greece’s debt load amounted to just under 130% of GDP. By the end of the year, after four years of EU-IMF mandated austerity, which has seen the Greek economy contract by more than 25 percent, it is expected to hit 175% of national output.

The IMF has longed pressed for the country’s debt problem to be resolved with Funds officials saying, openly, that a debt restructuring should have taken place earlier. In the two years from the onset of the debt crisis, when Athens received its first EU-IMF backed bailout, to the write-down that took place in 2012 (by far the biggest in global financial history) both the euro zone and Greece saw their economies go from bad to worse. European officials, not least in Berlin, feared contagion if Greece restructured its debt in 2010 – forcing the Fund to rip up its own rule book and lend to Greece, even though it knew it was highly unlikely it would ever get the money back.

The conference would be presaged by an October 10 Summit meeting of officials from the IMF, World Bank and ECB and EU, Ethnos reported.

Our own efforts to get confirmation of the meeting from Fund officials sadly fell on stony ground today.

“In the American capital, where the IMF is based, all issues pertaining to the Greek programme are kept very low-key,” Ethnos wrote. “But, according to [our] information, an open discussion is expected to take place in which the representatives of the lenders will each put forward their own proposals.

“[They] will attempt to come to some agreement about the debt … “and to see how they can proceed from there on,” it said.

The Greek government had hoped that the thorny issue would be addressed when Greece resumed talks with Troika officials in Paris this week. Instead, creditors ensured the issue was kept off the agenda, focusing instead on Athens’ performance in implementing structural reforms.

Some economists seem to be prepared to chuck this month’s disappointing jobs report in the trash.

Rob Carnell of ING says the headline jobs number simply doesn’t square with other surveys:

Non-farm payrolls has disappointed badly, with a rise of only 142K, no rise in employment in the manufacturing sector, and a fall in retail employment. The headline figure is weak compared to the ADP survey, and both of the ISM surveys, and also many of the regional surveys. As such, we are hard pressed to give it much credence. More believably, the unemployment rate did fall by 0.1pp to 6.1% and hourly wages, which were revised upwards, rose 0.2%mom to stand at 2.1%YoY. Not helping matters, the household survey showed a rise in employment in August of only 16K.

Such weakness plays into the hands of the Fed doves, of whom, Chair Janet Yellen is the most important, and gives her more leeway to stand firm against the hawks, many of whom are calling for a change in the Fed’s language on the likely timing and scale of policy normalisation.

Ian Shepherdson of Pantheon Macroeconomics takes a similar line:

And Ashraf Laidi, Chief Global Strategist of Cityindex.co.uk, reckons the report won’t make the Fed change course:

Since average hourly earnings continued to rise, the report overcomes the notion of weak wage growth and maintains the Federal Reserve on course to taper its asset purchases at this month’s FOMC meeting, with the plan to end QE3 next month.

The drop in August’s non-farm payroll may just be a one-off event, reckons Capital Economics.

Their chief US economist, Paul Ashworth, also suggests that wages aren’t rising fast enough to spook the Fed:

The modest 142,000 increase in non-farm payrolls in August, which was well below the consensus forecast at 230,000 and the smallest gain this year, will inevitably spark speculation that the US recovery is somehow coming off the rails again. However, we’re not too concerned by what is probably just an isolated blip.

Other indicators suggest that labour market conditions are still strengthening and the latest round of survey evidence indicates that economic activity is soaring. Accordingly, this doesn’t change our view that the Fed will begin to raise rates in March next year, a little earlier than many others expect, particularly not when the unemployment rate edged down to 6.1% last month, from 6.2%.

Admittedly, the unemployment rate only fell because the labour force shrank by 64,000. The alternative household survey measure suggests that employment increased by only 16,000 last month. Nevertheless, that still leaves the unemployment rate within touching distance of the 5.5% level that most economists would view as the long-run equilibrium rate.

The fact that average weekly hours worked were unchanged at 34.5 in August is another reason to believe that the slowdown in employment growth is nothing to worry about. Average hourly earnings increased by 0.2% m/m , but the annual growth rate was only 2.1%, adding some support to the Fed’s view that it can still wait for a considerable time before beginning to raise rates.

OK, just over 35 minutes until the US jobs data for August hits the wires.

It’s guaranteed to trigger at least a brief period of excitement in the financial markets, but more importantly it should give clues as to whether the American labour market improving...

...with knock-on impact for the Federal Reserve as it assesses whether to raise interest rates.

Economists will be looking at how many more people found work, whether more people entered the labour market, and whether wages picked up.

Wall Street expects:

• Around 230,000 new jobs were created in August, up from 209,000 last time
  
• A drop in the jobless rate, to 6.1% from 6.2%
  
• No change in the average weekly hours worked, at 34.5
  
• Average hourly earnings could rise to 2.1% annually, from 2.0% last month.

There’s a lot of debate this morning as to whether the ECB’s asset-backed securities programme should really be classed as a form of quantitative easing. Arguably it should.

The initial reaction in many quarters was that it’s not QE; as the ECB is buying securities based on private loans, not sovereign debt issued by governments.

Mario Draghi did indicate that the governing council was committed to using “additional unconventional instruments within its mandate”, suggesting that “full-blown” QE (as the FT puts it) is still on hand.

But the transcript of the press conference shows that he defines QE as an outright purchase of assets to expand the money supply. Rather like the ABS scheme, in fact.

As the ECB president put it:

On the first thing, the definition of QE is not really related to its size, but rather to its modalities. So QE is an outright purchase of assets. To give an example: rather than accepting these assets as collateral for lending, the ECB would outright purchase these assets. That’s QE. It would inject money into the system. Now, QE can be private sector asset-based, or also sovereign-sector, public sector asset-based, or both. The components of today’s measures are predominantly oriented to credit easing.

However, it’s quite clear that we would buy outright ABS, the senior tranches, and the mezzanine tranches only if there is a guarantee. In other words, very much like what the Fed did a few years ago. So there is also this component.

Almost half of the Federal Reserve’s latest QE programme has been used to buy mortgage-backed securities (MBSs), which will be a major factor in the ECB’s ABS programme. So what’s the difference?

Maybe it’s our fault for getting too fixed on QE as a magic cure.

Sir Mervyn King, the former Bank of England governor, didn’t even like using the term QE when discussing the £375bn of UK government bonds his bank had mopped up. He stuck to discussing the “asset purchase programme”, while the Fed always talks about an “asset purchase program”

Incidentally, Japan’s Nomura bank reckons there’s a decent chance of ‘full QE’ next year.

The ECB’s stimulus measures are likely to weaken the euro further, reckons Kit Juckes of Société Générale.

He predicts:

If the US recovery continues enough to allow the Fed to hike rates in line with its famous dots, we will see Eur/USD well below 1.20 in a couple of years.

Kit also reckons that today’s non-farm payroll will show another drop in the US unemployment, to 6.1%. Pay growth is also important:

I am watching wages to see if in a world where the annual pay increase is dead, pay growth is driven by whether we pay more for new entrants. This year’s crop of American graduate trainees and new teachers - I’m looking at you.

Good morning, and welcome to our rolling coverage of the financial market, the world economy, the eurozone and business.

After yesterday’s excitement from the European Central Bank, the financial markets are looking to America today. It’s Non-Farm Payroll Friday, when the latest US unemployment data shows how many more people joined the jobs market.

And crucially, the NFP will also indicate whether wages are picking up in America; an important factor for the Federal Reserve when deciding when to start raising interest rates.

Michael Hewson of CMC Markets reckons it will:

“reinforce the narrative of an improving US economy, and bring forward the prospect of a Fed rate hike in 2015.”

Economists expect that around 230,000 new jobs were created in America in August, up from 209k in July.

That would push the unemployment rate down to 6.1%, from 6.2% last month.

Average earnings are expected to edge higher to 2.1%. Hewson adds:

A number higher than 2% could well prompt additional speculation about an earlier rise in rates.

In Europe, though, there’s a sense that people are catching their breath and trying to work out the implications of the ECB’s latest stimulus moves.

Can a new programme to buy asset-backed securities, and the latest (and final) interest rate cuts steer Europe away from deflation and weak growth? Or is it just another spin of the roulette wheel by Super Mario Draghi?

In the meantime, the eurozone is hovering around $1.294, having tumbled two whole cents against the US dollar yesterday.

New eurozone growth data is due this morning, which will remind us just how weak it was last spring.

The first estimate of GDP in Q2, released last month, showed no growth in the euro area. That’s unlikely to change, but we will get more details about household spending, government expenditure, etc.

So here’s the agenda:

• 9.30am: Bank of England/GfK survey of inflation expectations
  
• 10am: Second estimate of Eurozone GDP for the second quarter of 2014
• 1.30pm: US non-farm payroll for August

I’ll be tracking all the main points through the day.....