Tag Archives: Labour / Personnel

Mattel will close Canada factory after shuttering two manufacturing sites in Asia: WSJ

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FILE PHOTO: The Mattel company logo is seen at the 114th North American International Toy Fair in New York City, U.S., February 21, 2017. REUTERS/Stephanie Keith/File Photo

(Reuters) – Mattel Inc (MAT.O) will close a factory in Canada after shutting down two plants in Asia, as the toymaker reduces its manufacturing footprint to cut costs, the Wall Street Journal said on Sunday.

The maker of Barbie dolls closed its manufacturing sites in China and Indonesia last year and will shut a facility in Canada sometime this year, the newspaper said.

The closure of the Mega Bloks factory in Montreal, Canada would affect about 580 workers, the journal reported, citing a company spokeswoman.

The manufacturing overhaul is said to be a part of Chief Executive Officer Ynon Kreiz’s plan to turn around and stabilize Mattel, which has struggled in recent years from weak sales, the newspaper added.

Mattel did not immediately respond to Reuters’ request for comment.

The El Segundo, California-based company is scheduled to report its earnings later in the week.

Reporting by Bhargav Acharya in Bengaluru; Editing by Lisa Shumaker

Our Standards:The Thomson Reuters Trust Principles.

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Oil rises to three-month excessive on upbeat information, Center East rigidity

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LONDON (Reuters) – Oil costs rose to three-month highs on Monday, underpinned by optimism over an anticipated China-U.S. commerce deal and upbeat industrial information, whereas merchants saved an in depth watch on the Center East following U.S. air strikes in Iraq and Syria.

FILE PHOTO: An oil pump is seen simply after sundown outdoors Saint-Fiacre, close to Paris, France September 17, 2019. REUTERS/Christian Hartmann

Brent crude futures LCOc1 had been up 0.9% at $68.75 a barrel, up 59 cents. The worldwide benchmark has risen round 27% in 2019.

West Texas Intermediate (WTI) crude futures CLc1 rose 22 cents or 0.2% to $61.94 a barrel by 0940 GMT. The U.S. benchmark is up about 36% to date this yr.

“Oil costs have reached their highest stage for the reason that Saudi oilfield assault in mid-September”, stated market analyst Margaret Yang of CMC Markets.

Regardless of a the comparatively low value positive factors regardless of an array of bullish elements, Yang added: “Merchants are additionally cautious about profit-taking prospects.”

Tensions within the Center East have flared up as america carried out air strikes on Sunday towards the Kataib Hezbollah militia group, whereas protesters in Iraq on Saturday briefly compelled the closure of its southern Nassiriya oilfield.

In the meantime, Libyan state oil agency NOC stated it’s contemplating the closure of its western Zawiya port and evacuating workers from the refinery because of clashes close by.

Oil costs had been additionally supported by declining U.S. crude shares, which fell by 5.5 million barrels within the week to Dec. 20, far exceeding a 1.7-million-barrel drop forecast in a Reuters ballot.

In China, manufacturing unit exercise had probably expanded once more in December on stronger exterior demand and an infrastructure push at dwelling though the tempo of progress is about to ease as markets await extra certainty on a U.S.-China commerce truce, a Reuters ballot confirmed.

China’s Commerce Ministry stated it’s in shut contact with america on the signing of a long-awaited commerce deal.

The 2 international locations on Dec. 13 introduced a “Part one” settlement that reduces some U.S. tariffs in alternate for what U.S. officers stated can be a giant bounce in Chinese language purchases of American farm merchandise and different items.

Some analysts, nevertheless, cited ample international crude shares as a serious impediment in 2020 to efforts to rein in output by the Group of the Petroleum Exporting International locations and its allies like Russia.

“At the same time as OPEC and its non-OPEC companions endeavor to make further provide cuts in Q1 2020, we’re not satisfied this will likely be enough to avert giant international stock,” stated Harry Tchilinguirian, international oil strategist at BNP Paribas.

“We stay of the opinion that oil fundamentals proceed to current draw back threat.”

Extra reporting by Seng Li Peng, modifying by Louise Heavens

Our Requirements:The Thomson Reuters Belief Ideas.

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U.S. unemployment fee hits 3.5%; job development average

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WASHINGTON, (Reuters) – The U.S. unemployment fee dropped to close a 50-year low of three.5% in September, with job development growing reasonably, suggesting the slowing economic system may keep away from a recession for now regardless of commerce tensions which can be hammering manufacturing.

The Labor Division’s intently watched month-to-month employment report on Friday, nevertheless, contained reminders that the dangers to the longest financial enlargement on document remained tilted to the draw back. Wage development stagnated and manufacturing payrolls declined for the primary time in six months. The retail and utilities sectors additionally continued to shed jobs.

The report adopted a string of weak financial studies, together with a plunge in manufacturing exercise to greater than a 10-year low in September and a pointy slowdown in companies trade development to ranges final seen in 2016, that heightened fears the economic system was flirting with a recession.

“The unemployment fee normally rises forward of a recession, so a contemporary decline pushes out the timeline for any potential recession into late 2020 on the earliest,” mentioned Josh Wright, chief economist at iCIMS in New York.

The 2-tenths of a proportion level drop within the unemployment fee from 3.7% in August pushed it to its lowest stage since December 1969. The jobless fee, which had been caught at 3.7% for 3 straight months, declined at the same time as 117,000 folks entered the labor drive final month.

Nonfarm payrolls elevated by 136,000 jobs final month, the federal government’s survey of institutions confirmed. The economic system created 45,000 extra jobs in July and August than beforehand estimated. Economists polled by Reuters had forecast payrolls would improve by 145,000 jobs in September.

September’s job positive aspects have been under the month-to-month common of 161,000 this 12 months, however nonetheless above the roughly 100,000 wanted every month to maintain up with development within the working-age inhabitants. The smaller family survey from which the unemployment fee is derived confirmed a leap of 391,000 in employment in September.

With indicators that the Trump administration’s 15-month commerce warfare with China is spilling over to the broader economic system, continued labor market energy is a crucial buffer towards an financial downturn. The commerce warfare has eroded enterprise confidence, sinking funding and manufacturing.

There’s additionally political uncertainty in Washington after the Democratic-controlled U.S. Home of Representatives launched an impeachment inquiry towards President Donald Trump over accusations he pressed Ukrainian President Volodymyr Zelenskiy to analyze former U.S. Vice President Joe Biden, a number one candidate for the 2020 Democratic presidential nomination.

These components, along with benign wage inflation, are prone to immediate the Federal Reserve to chop rates of interest a minimum of yet one more time this 12 months, economists mentioned. The U.S. central financial institution minimize charges final month after decreasing borrowing prices in July for the primary time since 2008, to maintain the financial enlargement, now in its 11th 12 months, on observe.

Fed Chair Jerome Powell reiterated on Friday that the economic system was “in a superb place,” including that “our job is to maintain it there so long as attainable.”

The greenback .DXY was little modified towards a basket of currencies. Costs of U.S. Treasuries rose marginally. Shares on Wall Avenue have been buying and selling increased.

STRONG GOVERNMENT HIRING

“We proceed to count on the Fed to chop its goal rate of interest later this month,” mentioned Michael Feroli, an economist at JPMorgan in New York. “We imagine it will have taken a a lot stronger quantity to persuade Fed management that they’ve already taken out sufficient insurance coverage towards draw back dangers.”

Financial development estimates for the third quarter vary from as little as a 1.3% annualized fee to as excessive as a 1.9% tempo. The economic system grew at a 2.0% tempo within the second quarter, slowing from a 3.1% fee within the January-March interval.

Slower development was bolstered by a report from the Commerce Division on Friday that confirmed the U.S. commerce deficit widened 1.6% to $54.9 billion in August.

A broader measure of unemployment, which incorporates individuals who need to work however have given up looking and people working part-time as a result of they can not discover full-time employment, declined to six.9% final month, the bottom stage since December 2000, from 7.2% in August.

Regardless of the tight labor market, common hourly earnings have been unchanged final month after advancing 0.4% in August. That lowered the annual improve in wages to 2.9% from 3.2% in August. The common workweek was unchanged at 34.Four hours.

Some economists imagine wage development is stalling as a result of firms are hiring inexperienced staff within the face of labor shortages. Others blame the slowdown on ebbing demand for staff.

“With demand for labor softening and plenty of firms contending with increased enter prices because the commerce warfare lingers and broadens, we don’t count on to see any significant strengthening in wage development within the coming months,” mentioned Sarah Home, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Hiring is slowing throughout all sectors, excluding authorities, which is being boosted by state and native authorities recruitment. Non-public payrolls elevated by 114,000 jobs in September after rising by 122,000 in August.

The three-month common acquire in personal employment fell to 119,000, the smallest since July 2012, from 135,000 in August.

Manufacturing shed 2,000 jobs final month, the primary decline in manufacturing unit payrolls since March, after a acquire of two,000 jobs in August. Manufacturing has paradoxically borne the brunt of the Trump administration’s commerce warfare, which the White Home has argued is meant to spice up the sector.

Final month’s decline in manufacturing payrolls was led by the automotive sector, which misplaced 4,100 jobs. Additional losses are possible if a strike by Basic Motors (GM.N) staff continues.

FILE PHOTO: A “Now Hiring” signal sits within the window of Tatte Bakery and Cafe in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder/File Photograph/File Photograph/File Photograph

Building employment elevated by 7,000 jobs after rising by 4,000 in August. Retail payrolls fell by 11,400 jobs, marking an eighth straight month-to-month drop.

Authorities employment elevated by 22,000 jobs in September after surging by 46,000 in August. Hiring was boosted by state and native governments. Just one,000 staff have been employed final month for the 2020 Census. Authorities payrolls have elevated by 147,000 over the 12 months, pushed by native governments.

Reporting by Lucia Mutikani; Enhancing by Sandra Maler and Paul Simao

Our Requirements:The Thomson Reuters Belief Rules.

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Divided Fed set to chop rates of interest this week, however then what?

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SAN FRANCISCO (Reuters) – Deep disagreements inside the Federal Reserve over the financial outlook and the way the U.S. central financial institution ought to reply is not going to cease policymakers from chopping rates of interest at a two-day assembly that begins on Tuesday.

FILE PHOTO: Federal Reserve Board Chairman Jerome Powell testifies earlier than a Senate Banking, Housing and City Affairs Committee listening to on the “Semiannual Financial Coverage Report back to Congress” on Capitol Hill in Washington DC, U.S., July 11, 2019. REUTERS/Leah Millis/File Photograph

Whereas an oil worth spike after assaults on Saudi Arabian oil amenities over the weekend added to the checklist of dangers dealing with an financial system already slowed by ongoing commerce tensions and world weak spot, the deep divide evident across the Fed’s policymaking desk means additional charge cuts could possibly be removed from a accomplished deal.

At one finish of the Fed’s large boardroom sit St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari, who’re anticipated to argue for a steep discount in borrowing prices to counter low inflation and an inverted Treasury yield curve.

Pushback from the alternative finish is prone to come from Cleveland Fed President Loretta Mester, who opposed the Fed’s charge minimize in July, and Philadelphia Fed President Patrick Harker, who solely reluctantly supported it and says he needs to depart charges the place they’re “to see how issues play out.”

Fed Chair Jerome Powell, seated halfway down the desk, faces the fragile activity of taking over board these views and the disparate arguments of the opposite dozen policymakers to construct consensus.

(To chop or to not minimize? right here)

(Communications breakdown: right here)

A high problem: making sense of financial information that means the U.S. manufacturing trade could also be contracting and inflation stays weak, at the same time as households proceed to spend and employers total are including loads of jobs.

“The discord is extraordinarily seen,” mentioned Gregory Daco, chief U.S. economist at Oxford Economics. “Should you take a look at the financial system right now, you take a look at an financial system that’s bifurcated … The important thing query is whether or not that weak spot seeps by means of the financial system, and whether or not that’s aggravated.”

For the reason that Fed’s 8-2 resolution to chop charges in July, a transfer that Powell referred to as a ‘mid-cycle’ adjustment, the financial information has delivered combined indicators.

Sturdy retail gross sales and continued wage progress might add to Boston Fed President Eric Rosengren’s confidence that present financial circumstances don’t justify additional coverage easing. He dissented within the July coverage resolution.

The continuing U.S.-China commerce battle makes Dallas Fed President Robert Kaplan amongst others involved about slowing manufacturing unit output and a slide in enterprise funding. Kaplan supported July’s charge minimize.

‘MIXED OPINION’

The latest wild card to consider to the talk emerged unexpectedly in Saturday’s assaults on the Saudi oil amenities, which triggered the most important spike in oil costs in additional than 20 years. [nL5N2674W4][nL5N2672I3]

Fed officers might see the event both as a danger to an already fragile progress outlook, which might help the case for extra easing, or as a fine addition to inflation, which might again a case for standing nonetheless for now.

Merchants of futures contracts tied to the Fed’s coverage charge have been pricing in, as of Monday afternoon, a 65.8% probability that the central financial institution would minimize its benchmark in a single day lending charge by 1 / 4 of a proportion level to a variety of 1.75% to 2% on Wednesday.

And although the conviction for additional charge hikes has softened since final week, merchants total proceed to anticipate yet another discount in borrowing prices by the tip of the yr.

“If everybody was on the identical web page on the Fed I might perceive it,” mentioned Lee Ferridge, head of macro technique for North America at State Road World Markets.

“However clearly there’s disagreement on the Fed … If the Fed may be very cut up and Powell can’t give a powerful sign, doesn’t that indicate only a few strikes are possible, reasonably than these dramatic cuts?”

Fed policymakers will deliver to the assembly their very own views of the place charges ought to be by December. In June, the final time they printed their forecasts, about half of policymakers anticipated a complete of two charge cuts this yr; about half thought no charges can be applicable.

That divide within the so-called Fed “dot plot” has borne little relation to how coverage has truly formed up, but it surely might add to confusion over the speed outlook after the conclusion of this week’s assembly.

With extra dovish policymakers like Bullard, Kashkari and Chicago Fed President Charles Evans calling for extra easing, and extra hawkish policymakers like Mester, Harker and Kansas Metropolis Fed President Esther George extra skeptical, “anticipate the 2019 dots to mirror this combined opinion,” mentioned Jefferies economist Ward McCarthy.

Reporting by Ann Saphir; Enhancing by Dan Burns and Paul Simao

Our Requirements:The Thomson Reuters Belief Ideas.

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Ryanair Irish pilot union to decide on strike ballot next week

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FILE PHOTO: Passengers disembark a Ryanair flight at Dublin International Airport in Dublin, Ireland. Aug 23, 2018. REUTERS/Hannah McKay

DUBLIN (Reuters) – Members of Ryanair’s Irish pilot union are to decide next week whether to join British colleagues in holding a ballot on strike action, according to a memo distributed to members.

Ryanair pilots in Britain, the Irish airline’s largest market, last week announced a ballot that could lead to strike action in late August, citing disagreements over pay and conditions.

Ryanair pilots who are members of the Irish Airline Pilots Association (IALPA) will meet in Dublin on Tuesday to decide whether to hold a ballot for “industrial action up to and including strike action”, with voting to begin on or before Thursday, July 25, the memo said.

It did not say when possible strike action would take place.

Ryanair, Europe’s largest low-cost carrier, suffered a series of damaging strikes last year after the carrier bowed to pressure in late 2017 to recognize unions for the first time.

Management say significant progress has been made since, with collective labor agreements concluded with a number of pilot unions throughout Europe.

But IALPA said in the memo that management had failed to agree pay, terms and conditions for directly employed pilots. The British Airline Pilots Association (BALPA) last week said issues included pensions, maternity benefits and a fair, transparent pay structure.

Ryanair, which says it offers better conditions than low-cost rivals for Boeing pilots, declined to comment on the union action.

On Tuesday, Ryanair said it had been forced to halve its growth plans for 2020 due to delays in the delivery of Boeing’s (BA.N) grounded 737 MAX jet and planned to start talks with airports and unions about downsizing or closing some operations from November 2019.

Reporting by Conor Humphries; Editing by Kirsten Donovan

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Lockheed Martin to keep Pennsylvania plant open at Trump’s request

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FILE PHOTO: The logo of Lockheed Martin is seen at Euronaval, the world naval defence exhibition in Le Bourget near Paris, France, October 23, 2018. REUTERS/Benoit Tessier

(Reuters) – Lockheed Martin Corp has decided to keep the Sikorsky helicopter plant in Coatesville, Pennsylvania, open after U.S. President Donald Trump pressed its chief executive to continue operations, the company said on Twitter on Wednesday.

“At the request of President Trump, I took another look at our decision to close the Coatesville, PA, facility and have decided to keep it open while we pursue additional work,” Lockheed Martin quoted CEO Marillyn Hewson as saying.

Trump applauded the decision in a tweet, saying, “We are very proud of Pennsylvania and the people who work there. Thank you to Lockheed Martin, one of the USA’s truly great companies!”

The F-35 fighter manufacturer had announced plans to close the plant, which does “completion work” for Sikorsky’s S-92 and S-76D helicopters, citing a multi-year slump in the rotorcraft industry. The plant employs about 465 employees.

“We look forward to working with the government and PA Congressional delegation to find more work for this facility,” the company said.

Republican Pennsylvania Senator Patrick Toomey said in a statement that Lockheed’s decision provided short-term certainty for workers at the plant who had expected to either lose their jobs or be re-located later this year.

Fellow Pennsylvania Senator Bob Casey, a Democrat, was skeptical about the announcement, however, saying he was concerned about the lack of a specific plan.

U.S. automaker General Motors Co has been under pressure for months from President Trump over the fate of an idled assembly plant in northeast Ohio which it has since announced it will sell.

Both Ohio and Pennsylvania are crucial to Trump’s chances of being reelected in 2020.

Reporting by Mekhla Raina in Bengaluru; Editing by Sonya Hepinstall

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BMW and Jaguar Land Rover to jointly develop electric car parts

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FRANKFURT (Reuters) – BMW and Jaguar Land Rover on Wednesday said they will jointly develop electric motors, transmissions and power electronics, unveiling yet another industry alliance designed to lower the costs of developing electric cars.

Both carmakers are under pressure to roll out zero-emission vehicles to meet stringent anti-pollution rules, but have struggled to maintain profit margins faced with the rising costs of making electric, connected and autonomous cars.

“Together, we have the opportunity to cater more effectively for customer needs by shortening development time and bringing vehicles and state-of-the-art technologies more rapidly to market,” said BMW board member Klaus Froehlich.

BMW and Jaguar Land Rover said they will save costs through shared development, production planning and joint purchasing of electric car components. Both companies will produce electric drivetrains in their own manufacturing facilities, BMW said.

The BMW Jaguar Land Rover pact comes as rivals FiatChrysler and Renault explore a $35 billion tie-up of the Italian-American and French carmaking groups.

Nick Rogers, Jaguar Land Rover’s engineering director said, “We’ve proven we can build world beating electric cars but now we need to scale the technology to support the next generation of Jaguar and Land Rover products.”

BMW was in talks with rival Daimler about developing electric car components but was also in discussions with Jaguar Land Rover, a company it once owned, to explore an alliance on engines.

BMW already has a deal to supply an 8 cylinder engine to Jaguar Land Rover.

Carmakers are increasingly open to sharing electric car parts because the technology is expensive and because customers no longer buy a car based on what engine a vehicle has.

“Carmakers are much less precious about sharing electric car technology because it is much harder to create product differentiation with electric car tech. They all accelerate fast, and everybody can do quality and ride and handling,” according to Carl-Peter Forster a former chief executive of Tata Motors and a former BMW executive.

Slideshow (2 Images)

Jaguar Land Rover is still run by former BMW managers, including Ralf Speth the company’s chief executive who spent 20 years at BMW prior to joining JLR, and Wolfgang Ziebart, the engineer who oversaw Jaguar’s iPace electric car program, who is a former head of research and development at BMW.

Jaguar Land Rover said it would redouble efforts to cut costs after it posted a $4 billion loss earlier this year, hit by a downturn in demand for sports utility vehicles in China and a regulatory clampdown on diesel emissions.

BMW bought Britain’s Rover Group, which included the Jaguar and Land Rover brands, for 800 million pounds in 1994 only to sell Jaguar Land Rover to Ford in March 2000 for $2.7 billion. In 2008 India’s Tata Group bought Jaguar and Land Rover from Ford for $2.3 billion.

Reporting by Edward Taylor, editing by Riham Alkousaa, Thomas Escritt and Alexandra Hudson

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Strong stock and bond markets at odds over global growth

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NEW YORK (Reuters) – It looks like something has to give in global markets.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 18, 2019. REUTERS/Brendan McDermid

Stocks and bonds around the world have rallied atypically together since the start of the year, rewarding investors both bullish and bearish on the direction of global growth.

The main catalyst for the gains was the Federal Reserve’s surprise decision in early January to pause its tightening policy, after four interest rate increases in 2018 raised fears it was being too aggressive as the economy cooled and inflation remained minimal. Those fears helped send global markets into a tailspin in December.

Yet with the U.S. benchmark S&P 500 near a record level and corporate junk bonds notching new highs, the question stock and bond investors are asking is whether the Fed’s next move will be a rate cut that further propels risk assets or a rate hike that cuts into the stock market’s momentum.

A move by the Fed on interest rates or a communication misstep by the central bank would likely end either the rally in the stock market or in investment-grade bonds by the end of the year, restoring the traditional give-and-take between risk and safety, investors say.

“The Fed is between a rock and a hard place,” said Kathleen Gaffney, a portfolio manager at Eaton Vance Management in Boston. “They can’t go lower because there are signs that inflation is rising and they can’t go higher because of global political uncertainty. It leaves the market on pause.”

The U.S. central bank has said it will soon stop letting bonds bought during its “quantitative easing” period following the financial crisis roll off its balance sheet, which also helped push yields on safe havens like Treasuries lower and acted as a tailwind for riskier assets.

Gaffney said the Fed will likely have to raise rates again because of rising wages and other forms of inflation by the end of the year, adding that such a move will “pierce” the high valuations in both the stocks and bond markets.

TWIN RALLY

The rolling four-month percentage change in the price of the S&P 500 and the 10-Year Treasury note have both been positive for three straight months, according to a Reuters analysis. That is the longest such streak since a five-month run that ended in August 2017, it showed.

In that same 2017 period, the S&P 500 gained and 10-year Treasury yields fell as the market digested conflicting economic reports during the first year of the Trump administration, before the Federal Reserve in September began quantitative tightening that resulted in bond yields rising as the S&P 500 continued to rally.

Since January equity markets around the world have made up much of the ground they lost during a wrenching fourth quarter of 2018 that sent the U.S. stock market to the brink of a bear market.

The S&P 500 and Europe’s STOXX 600 are up almost 16% year to date, while stock indexes in China are up nearly 30%.

The ICE Merrill Lynch U.S. high yield index is up 8.6% year to date while the Merrill Lynch World sovereign bond index is up almost 1.5%.

World stocks vs bonds – tmsnrt.rs/2IrqXeF

A rally in benchmark 10-year Treasury notes, usually seen as a safe haven, undercuts the picture of a “risk on” market. Their yields have slid from 2.69% at the start of the year to as low as 2.34% in late March.

“At this point in the cycle, equity investors are trying to take any incremental news positively while fixed income investors are not,” said Jen Robertson, a portfolio manager at Wells Fargo Asset Management in London. “It’s quite delicate at the moment and any negative news out of first quarter earnings could impact this sharp bounce.”

Further uncertainty due to the economic impact of the UK leaving the European Union, which has now been pushed back to Oct. 31, or a deterioration in U.S.-China trade talks could be a “shock to the system” and derail both stocks and bonds, she said.

The spread between U.S. three-month bills and 10-year notes turned negative for the first time since 2007 in March, a bearish sign as a yield curve inversion has signaled an upcoming economic recession in the past.

The move initially boosted stock prices as investors predicted it would hem the Fed in from future interest rate hikes. But equities could fall soon if recession fears continue to grow, said Hiroaki Hayashi, managing director of Fukoku Capital Management in Tokyo.

“If you look at the past experiences, share prices have often rallied six to nine months after the yield curve initially inverted before entering a major correction. I believe we are exactly at such a phase now.”

Despite outsized gains this year, financial markets have not indicated investors have faith that the global economy can grow without historically low interest rates a decade after the end of the Great Recession, said Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments.

“The bull market we’ve had for the past 10 years is essentially because of really low interest rates,” Bahuguna said.

“I don’t think that equilibrium will last much longer,” she added, saying rising inflation and low unemployment could soon test global markets’ ability to cope with tighter monetary policy.

Additional reporting by Hideyuki Sano in Tokyo and Terence Gabriel in New York.; Editing by Alden Bentley and Tom Brown

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Slowing manufacturing hiring may point to fraying U.S. expansion

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NEW YORK (Reuters) – The longest streak of U.S. factory hiring in a quarter century came to an unexpected end last month, and a clouded outlook for important manufacturing sectors like autos may impede a quick rebound, undermining a key plank of U.S. President Donald Trump’s economic agenda.

FILE PHOTO: A line worker installs the front seats on the flex line at Nissan Motor Co’s automobile manufacturing plant in Smyrna, Tennessee, U.S., August 23, 2018. REUTERS/William DeShazer/File Photo

That sector lost 6,000 jobs in March, the Labor Department said on Friday, ending a 19-month streak of gains that started in August 2017 and had it extended one more month would have become the longest uninterrupted expansion of factory employment since the mid-1980s.

As it stands, the just-ended run was the longest since a comparable streak from August 1993 through February 1995 and saw the generation of 410,000 U.S. factory jobs. By comparison, that earlier run during Democrat Bill Clinton’s presidency produced 526,000 new manufacturing positions. A 20-month streak back in the early 1980s generated 1.34 million production jobs.

Today, companies that produce cars, construction equipment and other manufactured goods account for 12 percent of an economy that in July marks 10 years of expansion, the longest on record. Back in the 1990s, manufacturing’s share of the economy was around 16 percent and it was closer to 20 percent in the early 1980s.

Trump campaigned on rebuilding the sector and his ability to create high-paying American manufacturing jobs, partly by pushing other countries for more favorable terms of trade.

For a graphic on U.S. manufacturing employment, see – tmsnrt.rs/2CYWCQt

Overall, though, the March jobs report was upbeat.

It showed U.S. employment growth in March accelerating from a 17-month low, signaling that February’s sharp pullback was more likely an anomaly rather than a sign of an impending economic slowdown. Nonfarm payrolls rose by 196,000 jobs for the month, while economists polled by Reuters forecast gains of 180,000 jobs.

Last month’s unexpected slowdown in factory hiring – economists polled by Reuters had forecast a gain of 10,000 jobs – may signal that slower consumer and business spending as well as softening auto sales may curtail manufacturing job growth going forward. Another possibility is that factories are finding trouble finding and retaining willing workers.

Weakness in the auto sector bears watching. Manufacturers in that area have announced thousands of job cuts to deal with slowing sales that have led to an inventory bloat. So far this year auto manufacturers and suppliers have unveiled plans to cut 15,887 jobs, according to data on Thursday from Challenger, Gray & Christmas Inc, an outplacement consultancy.

Yet some companies that are hiring in that sector report labor shortages in their regions.

Shawn Hendrix, president of Nissen Chemitec America Inc, which supplies parts for Honda and Subaru cars, said he is not seeing an industry slowdown. He is having trouble finding people to fill jobs at his London, Ohio, factory.

“We are hiring – in our area in central Ohio almost all manufacturers I know are hiring,” Hendrix said. But it’s hard to find workers willing to commit to long-term jobs: some quit after two days of orientation. “If we don’t develop a pipeline with our educators it’s going to be very difficult to sustain manufacturing,” he said.

It is possible that the figure for March is a blip. The Institute for Supply Management said on Monday that its index of national factory activity rose to a reading of 55.3 in March from 54.2 in February, which had marked the lowest level since November 2016.

Reporting by Trevor Hunnicutt; Editing by Dan Burns and Andrea Ricci

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