U.S Employment Rose by 120k in November – December Report 2011

The U.S. labor force grew again during November: according to the recent U.S. employment report, which was published today, December 2nd by the Bureau of Labor Statistics the number of non-farm employees grew by 120,000. The growth in employment was mainly in the private sector, while government employment continued to deteriorate. The main sectors that rose during November were in retail sales, business services, leisure and hospitality and health care. 


U.S. Nonfarm payroll employment up to November2011 December 2

Due to the growth in employment the rate of U.S. unemployment was sharply fell by 0.4 percent point from 9.0% to 8.6% (as seen in the chart below). The rate of unemployment reached its lowest level in over two years.

U.S. Unemployed Rate (percent) December 2 2011

Furthermore, the number of unemployed persons (13.3 million) sharply declined in November by 594 thousand from October.

As I have calculated in the past post, the average number of jobs needed to be created on an average monthly scale to keep up with the growth of the U.S. civilian labor force is at least 107,000 (see green line in the first chart above). This means that the increase in employment during November more than reaches this figure of containing the current employment with respect to the labor force’s natural growth.

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

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

Gold Market

As I have already analyzed in the recent gold price daily forecast, historically, as the non-farm payrolls rose gold price tended to decline; 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 November could consequently reverse the current rise of gold price.

The table below presents the correlation between the news of the U.S. labor report and the daily changes in gold and silver prices.

U.S.Labor Reports in 2011 gold price and silver prices December 2

Crude Oil Market

The growth in the non-farm employment is a positive sign for the progress of the U.S. economy from its labor force point of view and provides some cause for optimism; this might reflect that the U.S. economy is starting to slowly pull out of its economic slowdown; therefore this news may also reflect an expected growth in U.S. demand for crude oil, and consequently may pressure crude oil prices to rise.

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