U.S Employment Grew by 103k in September – October Report 2011

The U.S. labor force grew in September after it had remained unchanged in August: according to the recent U.S. employment report, which was published today, October 7th by the Bureau of Labor Statistics the number of non-farm employees inclined by 103,000. The increase in employment is partially related to the return of 45,000 telecommunications workers who had been on strike during August. This means that when controlling for the people who got back from the strike, the growth in the employment was only 58,000. The main sectors that inclined during September were in business services, health care and construction.

U.S. Nonfarm payroll employment up to September  2011 October 7

That being said, the U.S. unemployment rate remained unchanged at 9.1% (as seen in the chart below).

U.S. Unemployed Rate (percent) October 7 2011

Furthermore, the number of unemployed persons (14.0 million) nearly didn’t change as well during September, while the labor force edged to by 2.5 million during last month.

As I have calculated in the past post, the average number of jobs needed to be created on a monthly scale to ward off the increase in rate of unemployment due to growth of the U.S. civilian labor force is at least 107,000 (see green line in the first chart above). This means that only with the people who got back to work after the strike was resolved, the increase in employment during September could be construed as good news.

Following this news currently, the Euro to US dollar exchange rate is traded slightly up along with the AUD/USD, while crude oil prices and gold price are rising.

Now let’s breakdown how this news could affect the commodities markets, including gold and crude oil:

Gold Market

As analyzed in the recent gold and silver prices daily outlook, historically, as the non-farm payrolls rise gold price tend to decrease; this correlation was mostly due to the effect this news had on the US dollar; the news of the changes in the U.S. labor force during September could consequently curb the recent rally of gold price.

The table below shows the correlation between the news of the U.S. labor report and the daily changes in gold and silver prices (the complete analysis can be found in the gold and silver prices daily outlook for October 7th).

U.S.Labor Reports in 2011 gold price and silver prices October 7

Crude Oil Market

This report shows the U.S. economy slightly grew from its labor force point of view and provides some light optimism; this might reflect that the U.S. economy isn’t entering a deep recession as some have speculated in the past few weeks, but also isn’t out of the woods just yet; therefore this news may also reflect an expected growth in U.S. demand for oil, and consequently may drive crude oil prices up during the rest of the day.


For further reading:

Check out the new monthly outlook report on gold and silver prices for October 2011

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