US adds 311,000 jobs in February; UK economy returns to growth; regulators take over Silicon Valley Bank – as it happened

Some late breaking news: US regulators have shut down Silicon Valley Bank (SVB) and taken control of its customer deposits.

It’s the largest failure of a US bank since 2008, and came after the bank failed to raise new capital today.

Officials said they shut the bank to “protect insured depositors”.

The Federal Deposit Insurance Corporation (FDIC), which typically protects deposits up to $250,000, said it had taken charge of the deposits.

As we covered through the day, trading in SVB’s shares was halted after they plunged 60% yesterday, after revealing it had lost $1.8bn on a sale of securities – forcing it to look to raise funds.

The FT says it is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual.

They add:

The bank had abandoned its efforts to raise $2.25bn in new funding to cover losses on its bond portfolio earlier in the day and had been looking for a buyer to save it, according to people with knowledge of the matter.

Time to recap….

The US economy has added more jobs than expected last month, but wage growth has cooled.

The US Non-Farm Payroll rose by 311,000 new hires last month, more than expected, but a slowdown on the blowout 504,000 recorded in January.

The unemployment rate rose to 3.6%, as more people looked for work.

But the dollar weakened, with the data showing a slowdown in wage growth. Average hourly earnings for all private workers rose 0.2% versus 0.3% in January, with annual earnings up 4.6%.

Shares of some of the world’s largest banks have fallen as fears over the future of a small California lender ripple through the markets.

Investors were spooked by news that California-based Silicon Valley Bank, which primarily lends to tech startups, had launched an emergency share sale to shore up cash after revealing it had lost $1.8bn (£1.5bn) when it sold a portfolio of bonds in response to a decline in customer deposits.

SVB’s US-listed shares plunged 60% on Thursday but the rout also spread to other Wall Street stocks. Its shares were halted on Friday after tumbling 66% in premarket trading.

UPDATE: US regulators have now taken over Silicon Valley Bank.

The UK’s FTSE 100 index is down 149 points, or 1.9%, in late trading at 7,730. HSBC are down 5%, with Standard Chartered off 4.6% and Barclays losing 4.4%.

The UK economy grew faster than expected in January, we learned today.

GDP rose by 0.3%, helped by a return of schoolchildren to class after a flurry of illness in December, and Premier League football restarting after the World Cup.

The UK’s National Food Crime Unit (NFCU) is investigating a possible case of food fraud after a supermarket stocked beef with false British labels.

The UK regulator has told banks to consider slashing mortgage payments for borrowers struggling with rising bills, as it revealed that 356,000 homeowners could be at risk of missing their monthly instalments by summer 2024.

A payout for the boss of BP has been labelled a “kick in the teeth” for consumers battling the cost of living crisis, as chief executive Bernard Looney saw his pay package more than double to £10m after the oil and gas giant landed record profits linked to the war in Ukraine.

His package included a salary of £1.4m, a bonus of £2.4m – down fractionally on 2021 – and a £6m share award, as well as benefits. The total package was 120% more than the £4.5m he received in 2021.

The UK’s decision to delay the HS2 rail line will discourage British investment at a time when the US and mainland Europe are pushing forward with major spending on green technology, according to the chair of the National Infrastructure Commission.

Sir John Armitt said the delay to HS2, a high-speed line that aims to increase British rail capacity, contrasted with the heavy investments by the US and EU on decarbonisation.

And Boots is cutting the points per pound shoppers can earn on their loyalty card by a quarter, while offering discounts on its own-brand products.

The health and beauty chain told customers via email that from May, holders of the Boots Advantage card would collect 3p worth of points for every £1 spent, instead of 4p. They will keep the number of points they have already collected, which will still be worth the same amount.

The UK economy is ‘going nowhere’, warns our economics editor Larry Elliott.

Following this morning’s GDP report, showing 0.3% growth in January – but no growth over the last year – he writes:

Jeremy Hunt took comfort from the fact the economy is showing more resilience than expected but rightly noted there was a “long way to go”. The good news for the chancellor is that the recession predicted by the Bank of England last November has yet to materialise, and even if it does come to pass is likely to be shorter and more shallow than expected last autumn. Higher growth means stronger tax receipts, lower borrowing and some extra wriggle room for Hunt in next week’s budget.

The bad news is that it is going to be some time before the economy benefits from lower global gas prices and falling inflation. GDP is not going to do much more than edge sideways again this year, if that, and even after beating forecasts in January it is still possible the economy will contract in the first quarter. The boost to private healthcare noted by the ONS is an indication of the effect on the economy of this winter’s widespread industrial action.

skip past newsletter promotion

Sterling is on track for its best day against the US dollar since the first week of January.

The news that the UK economy grew faster than expected in January has boosted the pound, while the mixed US jobs report weakened dollar.

Analysts say the 0.3% increase in GDP in January, ahead of forecasts of a 0.1% gain, has eased fears of a recession.

Matthew Ryan, head of market strategy at Ebury, explains:

“At this stage, we are far from convinced that a technical recession in 2023 is the foregone conclusion that many in the market have made out.

We think that the resilience of the UK economy will provide decent support for the pound in the coming months.”

The pound is currrently up 1.4% against the dollar at $1.2090, its biggest jump against the greenback since 6 January.

The US unemployment rate has edged up to 3.6% for February, with the number of unemployed persons rising to 5.9 million, the Bureau of Labor Statistics reports.

Newsflash: Job creation across the US slowed last month, but more jobs were created than expected.

The Non-Farm Payroll, a closely-watched measure of US employment, rose by 311,000 in February, rather stronger than the 205,000 which was expected.

That follows a (downwardly revised) 504,000 in January. January’s non-farm payroll increase had initially been estimated at 517,000 jobs last month.